The Impact of Paid Leave on Female Employment Outcomes

Abstract:

 

This paper provides evidence on the impact of job-protected family leave on leave-taking and employment outcomes. I study the impact of a state-level paid leave program in California on (1) new mothers' leave-taking and (2) subsequent labor market outcomes: female employment, hiring, and separations. I exploit the institutional feature the fact that paid leave in California includes job protection only for women who work at firms with 50 or more employees. I find that the increase in leave-taking as a result of California's program is largest for women who work at large firms and thus have access to job protection. Furthermore, it appears that gains for disadvantaged subgroups (less-educated, unmarried, and minority new mothers) exist only for the subsample of women who work at large firms and thus have access to job protection. I then examine the impact of job-protected leave on female employment. Using a difference-in-difference-in-differences approach, I comparing labor market outcomes for women at large versus small firms in California to women at large versus small firms outside of California after the passage of paid leave. I find suggestive evidence that large employers who are forced to offer job-protected leave decrease female hiring by 1.1% in favor of less costly male employees. However, I also find evidence that female separations decrease by 1.5% as a result of access to job-protected leave, so that female employment overall increases slightly. These results provide evidence of both a supply-side and demand-side effect of job-protected leave. Women are both more attached to a labor force that affords them more flexibility after childbirth, but also are more costly to employers if they are likely to take leave to care for newborns. 

Last updated on 04/03/2018