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Why Firms Offer Paid Parental Leave: An Exploratory Study

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  • Claudia Goldin
  • Sari Pekkala Kerr
  • Claudia Olivetti

Abstract

Why do competitive firms in the US provide paid parental leave (PPL)? Which firms do and to what extent? We use several firm- and individual-level data sets to answer these questions. These include the BLS-Employee Benefit Survey (EBS) for 2010 to 2018 and an extensive firm-level data collection that we compiled. Our work is undergirded by a two-period model with competitive firms whose workers vary by their optimal firm-specific training and the probability that each will remain on the job after PPL is taken. We find that firm-provided PPL has greatly increased in the last two decades and generally covers new fathers. The levels of provision differ greatly by the industry, firm size, and the degree of firm-specific training. But even the top-of-the-line firm in the US provides fewer fully paid parental weeks than does the median OECD nation.

Suggested Citation

  • Claudia Goldin & Sari Pekkala Kerr & Claudia Olivetti, 2020. "Why Firms Offer Paid Parental Leave: An Exploratory Study," NBER Working Papers 26617, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26617
    Note: CH DAE LS
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    References listed on IDEAS

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    1. Sari Pekkala Kerr, 2016. "Parental Leave Legislation and Women's Work: A Story of Unequal Opportunities," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 35(1), pages 117-144, January.
    2. Tor Eriksson & Nicolai Kristensen, 2014. "Wages or Fringes? Some Evidence on Trade-Offs and Sorting," Journal of Labor Economics, University of Chicago Press, vol. 32(4), pages 899-928.
    3. Bana, Sarah & Bedard, Kelly & Rossin-Slater, Maya & Stearns, Jenna, 2023. "Unequal use of social insurance benefits: The role of employers," Journal of Econometrics, Elsevier, vol. 233(2), pages 633-660.
    4. Charles L. Baum II & Christopher J. Ruhm, 2016. "The Effects of Paid Family Leave in California on Labor Market Outcomes," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 35(2), pages 333-356, April.
    5. John M. Evans, 2002. "Work/Family Reconciliation, Gender Wage Equity and Occupational Segregation: The Role of Firms and Public Policy," Canadian Public Policy, University of Toronto Press, vol. 28(s1), pages 187-216, May.
    6. Dale-Olsen, Harald, 2006. "Wages, fringe benefits and worker turnover," Labour Economics, Elsevier, vol. 13(1), pages 87-105, February.
    7. Tanya S. Byker, 2016. "Paid Parental Leave Laws in the United States: Does Short-Duration Leave Affect Women's Labor-Force Attachment?," American Economic Review, American Economic Association, vol. 106(5), pages 242-246, May.
    8. Sarah Bana & Kelly Bedard & Maya Rossin-Slater, 2018. "Trends and Disparities in Leave Use under California's Paid Family Leave Program: New Evidence from Administrative Data," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 388-391, May.
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    Cited by:

    1. Lucifora, Claudio & Meurs, Dominique & Villar, Elena, 2021. "The “mommy track” in the workplace. Evidence from a large French firm," Labour Economics, Elsevier, vol. 72(C).
    2. Machado, Cecilia & Neto, Valdemar & Szerman, Christiane, 2023. "Firm and Worker Responses to Extensions in Paid Maternity Leave," IZA Discussion Papers 16555, Institute of Labor Economics (IZA).
    3. Ilaria D'Angelis, 2023. "The Search for Parental Leave and the Early-Career Gender Wage Gap," Working Papers 2023-01, University of Massachusetts Boston, Economics Department.
    4. Anand, Priyanka & Dague, Laura & Wagner, Kathryn L., 2022. "The role of paid family leave in labor supply responses to a spouse's disability or health shock," Journal of Health Economics, Elsevier, vol. 83(C).
    5. Gozde Corekcioglu & Marco Francesconi & Astrid Kunze, 2020. "Do Generous Parental Leave Policies Help Top Female Earners?," CESifo Working Paper Series 8330, CESifo.
    6. Thomas Høgholm Jørgensen & Jakob Egholt Søgaard, 2021. "Welfare Reforms and the Division of Parental Leave," CEBI working paper series 21-09, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    7. Timpe, Brenden, 2024. "The labor market impacts of America’s first paid maternity leave policy," Journal of Public Economics, Elsevier, vol. 231(C).
    8. Pierre-Jean Messe & Jeremy Tanguy, 2022. "Does gender equality bargaining reduce child penalty? Evidence from France," TEPP Working Paper 2022-19, TEPP.
    9. Del Rey, Elena & Racionero, Maria & Silva, Jose I., 2024. "Employer vs government parental leave: Labour market effects," Economic Modelling, Elsevier, vol. 136(C).
    10. Fariha Kamal & Asha Sundaram & Cristina J. Tello-Trillo, 2020. "Family-Leave Mandates and Female Labor at U.S. Firms: Evidence from a Trade Shock," Working Papers 20-25, Center for Economic Studies, U.S. Census Bureau.
    11. Cecilia Machado & Valdemar Neto & Christiane Szerman, 2023. "Firm and Worker Responses to Extensions in Paid Maternity Leave," CESifo Working Paper Series 10736, CESifo.

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    More about this item

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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