January 8, 2020

Cluster-Seminar Public Finances and Living Conditions

A firm-side perspective on parental leave

Date

January 8, 2020
12:30 - 13:30

Location

Anna J. Schwartz Room
Room 5.2.010
Mohrenstraße 58
10117 Berlin

Speaker

Mathias Huebener
A large literature documents effects of parental leave on mothers' labour market outcomes, yet we know very little about the effects on their  firms and co-workers. We use unique administrative data that covers the universe of employees subject to social security and firms in Germany to address this question. We first establish some novel stylised facts in parental leave-taking  with respect to firm characteristics and worker substitutability: Mothers take longer leave periods  the more internal and  external substitutes are available. We then use an exogenous and substantial increase in  paid parental leave entitlements to study how longer leave absences by mothers causally affect the short- and long-run employment outcomes of mothers and their co-workers, as well as  firm productivity, worker turnover, and closures. For identification, we exploit the 2007-parental leave reform that introduced an earnings-related parental leave payment scheme and that reduced employment particularly among high-earning women in the first year after childbirth. Our findings provide important insights into the firm-side effects of  parental leave absences  and help reconcile why longer parental leave breaks have a negligible or even positive effect on maternal labour market outcomes in the long-run.