Parental Leave, Worker Substitutability and Firms’ Employment

Mathias Huebener, Jonas Jessen, Daniel Kuehnle and Michael Oberfichtner

The Economic Journal, 2025, vol. 135, issue 669, 1467-1495

Abstract: Motherhood and parental leave are frequent causes of worker absences and employment interruptions, yet little is known about their effects on firms. Based on linked employer-employee data from Germany, we examine how parental leave absences affect small- and medium-sized firms. We show that they anticipate the absence with replacement hirings in the six months before childbirth. A 2007 parental leave reform extending leave absences reduces firm-level employment and total wages up to three years after childbirth, driven by firms with few internal substitutes for the absent mother. However, we do not find longer-term effects on firms’ employment, wage bills or likelihood to shut down. The reform led to an increase in replacement hirings, but firms did not respond to longer expected absences of mothers by subsequently hiring fewer young women. Overall, our findings show that anticipated, extended parental leave does not have a lasting impact on firms.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1093/ej/ueae114 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:econjl:v:135:y:2025:i:669:p:1467-1495.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Economic Journal is currently edited by Francesco Lippi

More articles in The Economic Journal from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press () and ().