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The Response of Firms to Maternity Leave and Sickness Absence

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  • Schmutte, Ian M.
  • Skira, Meghan M.

Abstract

The costs to a firm of employee absence depend on how easy it is to find a replacement. We study how firms respond to predictable, but uncertain, worker absences that arise from maternity and non-work-related sickness leave. Using administrative data on over two million spells of leave in Brazil, we identify the short-run effects of a leave spell starting on a firm's employment, hiring, and separations. We find that firms respond immediately to the start of leave by hiring new workers, and to a lesser extent, by limiting job separations. However, firms replace leave-takers at far less than the onefor- one rate implied by a frictionless labor market model. Hiring responses are more pronounced for absences arising in occupations with more transferable skills and in firms operating in thicker labor markets. Altogether, our results suggest that replacing workers using external markets is costly and firms manage predictable worker absences through other channels.

Suggested Citation

  • Schmutte, Ian M. & Skira, Meghan M., 2020. "The Response of Firms to Maternity Leave and Sickness Absence," GLO Discussion Paper Series 691, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:691
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    Cited by:

    1. Rettl, Daniel A. & Schandlbauer, Alexander & Trandafir, Mircea, 2022. "Employee Health and Firm Performance," IZA Discussion Papers 15147, Institute of Labor Economics (IZA).
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    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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