Employer vs Government Parental Leave: Labour Market Effects

Elena Del Rey, Maria Racionero and José Silva

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

Abstract: WA relatively large number of firms in Australia and in the US offer employer-funded parental leave to their employees beyond legal requirements. We introduce government-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. In equilibrium, the wage and the labour market tightness are determined by the point at which the wage and job creation curves intercept. We study the reasons behind the presence of employer-funded parental leave and its effects on wages and employment. We also explore the labour market and welfare effects of the introduction and extension of government-funded parental leave.

Keywords: Employer-funded paid parental leave; wages; unemployment (search for similar items in EconPapers)
JEL-codes: J30 J64 J68 (search for similar items in EconPapers)
Date: 2023-09
New Economics Papers: this item is included in nep-dge, nep-ger, nep-inv and nep-lab
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Journal Article: Employer vs government parental leave: Labour market effects (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2023-692

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