Seminar

Labor Market Effects of Reducing the Gender Gap in Parental Leave Entitlements

Maria Racionero (Australian National University)

November 29, 2019, 11:00–12:30

Room TJ.305

Public Economics Seminar

Abstract

We explore the effects of parental leave entitlements for mothers and fathers on wages and unemployment. To do so we include two types of workers, males and females, who compete for the same jobs, in a labour search and matching model with parental leave. We show that increases in leave duration have ambiguous effects on market tightness and wages. We identify, analytically and graphically, the mechanisms behind these ambiguous effects. Given the variety of theoretical cases we calibrate the model for selected countries (France, Italy, Norway and Portugal) and simulate policy changes. In all countries considered an increase in duration of either type-specific leave reduces both wages and increases unemployment, which is consistent with a relatively large negative effect of the leave on job creation. The simulated effects are however relatively small and suggest that the scope for leave duration policy to reduce gender wage and employment gaps is limited. (work with Elena Del Rey and Jose I. Silva )