The Impact of Job-Protected Leave on Female Leave-Taking and 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.

Keywords: parental leave, leave-taking, paid leave, maternal employment, mandated benefits

JEL Classification: J2, J13, J18