Firm and Worker Responses to Extensions in Paid Maternity Leave

58 Pages Posted: 27 Oct 2023

See all articles by Cecilia Machado

Cecilia Machado

Getulio Vargas Foundation (FGV)

Valdemar Pinho Neto

Brazilian School of Economics and Finance

Christiane Szerman

London School of Economics

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Abstract

This paper investigates how firms and workers respond to a voluntary government-funded program increasing the duration of paid maternity leave from four to six months in Brazil. We show that larger, higher-paying, and more productive firms are more likely to provide extended leaves to workers. Exploiting the gradual implementation of extended leave across firms and the exact time of leave-taking, we present four key findings. First, we find an incomplete take-up of 35 percent among eligible workers, largely driven by those with high socioeconomic status. Second, firms and workers strategically defer job separations to extract rents from the government. Third, extended leave has no long-term impact on maternal labor market outcomes. Fourth, job security and information transmission about leave extensions boost take-up and reduce deferred job separations. The results illustrate that distributional concerns can justify the mandated provision of extensions in paid maternity leave.

Keywords: maternity leave, labor market, social protection

JEL Classification: J13, J22, J32

Suggested Citation

Machado, Cecilia and Pinho Neto, Valdemar and Szerman, Christiane, Firm and Worker Responses to Extensions in Paid Maternity Leave. IZA Discussion Paper No. 16555, Available at SSRN: https://ssrn.com/abstract=4614728 or http://dx.doi.org/10.2139/ssrn.4614728

Cecilia Machado (Contact Author)

Getulio Vargas Foundation (FGV) ( email )

R. Dr. Neto de Araujo 320 cj 1307
Rio de Janeiro, Rio de Janeiro 22250-900
Brazil

Valdemar Pinho Neto

Brazilian School of Economics and Finance ( email )

RJ 22250
Rio de Janeiro
Brazil

Christiane Szerman

London School of Economics

Economics Department
32 Lincoln's Inn Fields
London, London WC2A 3PH
United Kingdom

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