 Employer vs government parental leave: Labour market effectsElena Del Rey, Maria Racionero and José Silva Economic Modelling, 2024, vol. 136, issue C Abstract: A relatively large number of firms in Australia and in the US offer employer-funded parental leave to their employees. We introduce employer-funded parental leave in a theoretical labour search and matching model. Firms choose the duration of paid parental leave offered to prospective employees. Matched firms and workers then negotiate wages through a Nash bargaining process. We show that employer-funded leave allows firms to pay lower wages. In this context, extending government-funded parental leave reduces the benefits of employer-funded leave to firms, reducing total leave duration. It also affects equilibrium wages and employment. We calibrate the model using Australian data. We show that increases in both government-funded leave duration and replacement rate can be welfare improving and, in particular, the welfare effects of government leave duration display an inverted U-shape. Keywords: Employer-funded paid parental leave; Wages; Employment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:136:y:2024:i:c:s0264999324001020 DOI: 10.1016/j.econmod.2024.106746 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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