IDEAS home Printed from https://ideas.repec.org/p/cep/cepdps/dp1262.html
   My bibliography  Save this paper

The Impact of Mandatory Entitlement to Paid Leave on Employment in the UK

Author

Listed:
  • Alexander C. Lembcke

Abstract

I evaluate the impact of the UK Working Time Regulations 1998, which introduced mandatory paid holiday entitlement. The regulation gave (nearly) all workers the right to a minimum of 4 weeks of paid holiday per a year. With constant weekly pay this change amounts effectively to an increase in the real hourly wage of about 8.5% for someone going from 0 to 4 weeks paid holiday per year, which should lead to adjustments in employment. For employees I use complementary log-log regression to account for right-censoring of employment spells. I find no increase in the hazard to exit employment within a year after treatment. Adjustments in wages cannot explain this result as they are increasing for the treated groups relative to the control. I also evaluate the long run trend in aggregate employment, using the predicted treatment probabilities in a difference-in-difference framework. Here I find a small and statistically significant decrease in employment. This effect is driven by a trend reversal in employment, coinciding with the treatment.

Suggested Citation

  • Alexander C. Lembcke, 2014. "The Impact of Mandatory Entitlement to Paid Leave on Employment in the UK," CEP Discussion Papers dp1262, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1262
    as

    Download full text from publisher

    File URL: https://cep.lse.ac.uk/pubs/download/dp1262.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard K. Crump & V. Joseph Hotz & Guido W. Imbens & Oscar A. Mitnik, 2009. "Dealing with limited overlap in estimation of average treatment effects," Biometrika, Biometrika Trust, vol. 96(1), pages 187-199.
    2. Paul Smith & Gary Morton, 2001. "New Labour’s Reform of Britain’s Employment Law: The Devil is not only in the Detail but in the Values and Policy Too," British Journal of Industrial Relations, London School of Economics, vol. 39(1), pages 119-138, March.
    3. Jennifer Hunt, 1999. "Has Work-Sharing Worked in Germany?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 117-148.
    4. Mark B. Stewart, 2004. "The Impact of the Introduction of the U.K. Minimum Wage on the Employment Probabilities of Low-Wage Workers," Journal of the European Economic Association, MIT Press, vol. 2(1), pages 67-97, March.
    5. Joseph Altonji & Jennifer Oldham, 2003. "Vacation laws and annual work hours," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 27(Q III), pages 19-29.
    6. Ioana Marinescu, 2009. "Job Security Legislation and Job Duration: Evidence from the United Kingdom," Journal of Labor Economics, University of Chicago Press, vol. 27(3), pages 465-486, July.
    7. Bruno Crepon & Francis Kramarz, 2002. "Employed 40 Hours or Not Employed 39: Lessons from the 1982 Mandatory Reduction of the Workweek," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1355-1389, December.
    8. Sarah Oxenbridge & William Brown & Simon Deakin & Cliff Pratten, 2003. "Initial Responses to the Statutory Recognition Provisions of the Employment Relations Act 1999," British Journal of Industrial Relations, London School of Economics, vol. 41(2), pages 315-334, June.
    9. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2004. "Evaluating the Employment Impact of a Mandatory Job Search Program," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 569-606, June.
    10. Giacomi De Giorgi, 2005. "Long-term effects of a mandatory multistage program: the New Deal for young people in the UK," IFS Working Papers W05/08, Institute for Fiscal Studies.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martins, Pedro S., 2016. "Can Overtime Premium Flexibility Promote Employment? Firm- and Worker-Level Evidence from a Labour Law Reform," IZA Discussion Papers 10205, Institute of Labor Economics (IZA).
    2. Martins, Pedro S., 2017. "Economic effects of overtime premium flexibility: Firm- and worker-level evidence from a law reform," GLO Discussion Paper Series 102, Global Labor Organization (GLO).
    3. Gerard J. van den Berg & Antoine Bozio & Mónica Costa Dias, 2020. "Policy discontinuity and duration outcomes," Quantitative Economics, Econometric Society, vol. 11(3), pages 871-916, July.
    4. Kuroda, Sachiko, 2010. "Do Japanese Work Shorter Hours than before? Measuring trends in market work and leisure using 1976-2006 Japanese time-use survey," Journal of the Japanese and International Economies, Elsevier, vol. 24(4), pages 481-502, December.
    5. Ronald L. Oaxaca & Galiya Sagyndykova, 2020. "The effect of overtime regulations on employment," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-89, December.
    6. Hélène Couprie & Xavier Joutard, 2017. "Atypical Employment and Prospects of the Youth on the Labor Market in a Crisis Context," THEMA Working Papers 2017-08, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    7. Pedro Raposo & Jan Ours, 2010. "How a Reduction of Standard Working Hours Affects Employment Dynamics," De Economist, Springer, vol. 158(2), pages 193-207, June.
    8. Stéphane Carcillo & Alexander Hijzen & Stefan Thewissen, 2024. "The limitations of overtime limits to reduce long working hours: Evidence from the 2018 to 2021 working time reform in Korea," British Journal of Industrial Relations, London School of Economics, vol. 62(1), pages 98-126, March.
    9. Marie-Louise Leroux & Gregory Ponthiere, 2018. "Working time regulation, unequal lifetimes and fairness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 51(3), pages 437-464, October.
    10. Fang, Tony & Lin, Carl & Tang, Xueli, 2018. "How Has the Two-Day Weekend Policy Affected Labour Supply and Household Work in China?," IZA Discussion Papers 11698, Institute of Labor Economics (IZA).
    11. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    12. Santos Raposo, P.M. & van Ours, J.C., 2008. "How Working Time Reduction Affects Employment and Earnings," Discussion Paper 2008-81, Tilburg University, Center for Economic Research.
    13. Jean‐François Fagnart & Marc Germain & Bruno Van der Linden, 2023. "Working time reduction and employment in a finite world," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(1), pages 170-207, January.
    14. Gebhard Kirchgässner, 2009. "Critical Analysis of Some Well-Intended Proposals to Fight Unemployment," University of St. Gallen Department of Economics working paper series 2009 2009-17, Department of Economics, University of St. Gallen.
    15. Peter Frase & Janet Gornick, 2009. "The Time Divide in Cross-National Perspective: The Work Week, Gender and Education in 17 Countries," LIS Working papers 526, LIS Cross-National Data Center in Luxembourg.
    16. Kawaguchi, Daiji & Lee, Jungmin & Hamermesh, Daniel S., 2013. "A gift of time," Labour Economics, Elsevier, vol. 24(C), pages 205-216.
    17. Kentaro Asai, 2022. "Working Hour Reform, Labor Demand and Productivity," PSE Working Papers halshs-03728157, HAL.
    18. Matthieu Chemin & Etienne Wasmer, 2009. "Using Alsace-Moselle Local Laws to Build a Difference-in-Differences Estimation Strategy of the Employment Effects of the 35-Hour Workweek Regulation in France," Journal of Labor Economics, University of Chicago Press, vol. 27(4), pages 487-524, October.
    19. Mirko Draca & Stephen Machin & John Van Reenen, 2011. "Minimum Wages and Firm Profitability," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 129-151, January.
    20. Pauline Carry, 2022. "The Effects of the Legal Minimum Working Time on Workers, Firms and the Labor Market," SciencePo Working papers Main hal-04067393, HAL.

    More about this item

    Keywords

    UK Working Time Regulation; Employment and labour regulation; UK LFS;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cep:cepdps:dp1262. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://cep.lse.ac.uk/_new/publications/discussion-papers/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.