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The Effect of New Jersey’s Paid Parental Leave Policy on Employment

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  • Reed, Joshua
  • Vandegrift, Donald

Abstract

Paid parental leave policy remains a continuing source of controversy in the United States. Advocates for parental leave policy maintain that it has a positive effect on child rearing outcomes and family happiness. Critics, however, maintain that paid parental leave will cause firms to hire fewer women. This paper evaluates the critics’ claim that paid family leave entitlements will reduce employment using the New Jersey family leave law that took effect in 2009. We conduct a difference-in-difference analysis that compares county-level employment in western New Jersey using eastern Pennsylvania as a control. We disaggregate county-level employment to test whether women, workers of childbearing age, educated workers experienced larger employment effects in western New Jersey (relative to eastern Pennsylvania) following the New Jersey family leave law. We also conduct similar comparisons within New Jersey. Our estimates suggest that the New Jersey family leave law reduces overall employment by about 3.3 percent. However, the employment reductions among women, people of childbearing age, and more highly skilled workers are relatively larger. Finally, we find little evidence that family leave mandates have employment effects for unskilled workers.

Suggested Citation

  • Reed, Joshua & Vandegrift, Donald, 2016. "The Effect of New Jersey’s Paid Parental Leave Policy on Employment," MPRA Paper 74794, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:74794
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    File URL: https://mpra.ub.uni-muenchen.de/74794/1/MPRA_paper_74794.pdf
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    Cited by:

    1. Wendy A. Stock & Myron Inglis, 2021. "The longer‐term labor market impacts of paid parental leave," Growth and Change, Wiley Blackwell, vol. 52(2), pages 838-884, June.

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    More about this item

    Keywords

    paid family leave; paid maternity leave; difference-in-difference; employment;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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