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Efficiency-enhancing role of mandatory leave policy in a search-theoretic model of the labor market

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  • Miyazaki, Koichi

Abstract

Workers temporarily leave their jobs for various reasons, for example, maternity, caregiving, and illness. In such a situation, a firm can lay off these workers and search for a new worker. To protect workers from such a firm's behavior, many developed countries have implemented a mandatory leave policy. The goal of this study was to rationalize such a government intervention in the labor market from an efficiency perspective. To achieve this objective, this study constructed a search-theoretic model of the labor market and analyzed a steady-state equilibrium in the model. The results demonstrated that introducing a mandatory leave policy increases efficiency under certain conditions. This result justifies such government interventions in the labor market from an efficiency perspective.

Suggested Citation

  • Miyazaki, Koichi, 2023. "Efficiency-enhancing role of mandatory leave policy in a search-theoretic model of the labor market," MPRA Paper 116614, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116614
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    File URL: https://mpra.ub.uni-muenchen.de/116614/1/MPRA_paper_116614.pdf
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    References listed on IDEAS

    as
    1. Andres Erosa & Luisa Fuster & Diego Restuccia, 2010. "A General Equilibrium Analysis of Parental Leave Policies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(4), pages 742-758, October.
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    5. Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(2), pages 279-298.
    6. Del Rey, Elena & Racionero, Maria & Silva, Jose I., 2021. "Labour market effects of reducing the gender gap in parental leave entitlements," Labour Economics, Elsevier, vol. 72(C).
    7. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Search-theoretic model of the labor market; temporary leave; mandatory leave policy; efficiency;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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