Anti-discrimination Legislation and the Efficiency-Enhancing Role of Mandatory Parental Leave

Spencer Bastani, Tomer Blumkin and Luca Micheletto

No 5917, CESifo Working Paper Series from CESifo

Abstract: We study a setting where anti-discrimination legislation gives rise to adverse selection in the labor market. Firms rely on nonlinear compensation contracts to screen workers who differ in their family/career orientation. This results in a labor market equilibrium where career-oriented workers are offered an inefficiently low duration of parental leave. In addition, family-oriented workers are offered lower wages as compared to their equally skilled career-oriented counterparts. We demonstrate the usefulness of mandatory parental leave rules in mitigating the distortion in the labor market and derive conditions under which a Pareto improvement is possible. We also characterize the optimal parental leave policy and highlight the possibility for parental leave legislation to eliminate the wage penalty of family-oriented workers by supporting pooling employment contracts.

Keywords: anti-discrimination; adverse selection; parental leave; efficiency (search for similar items in EconPapers)
JEL-codes: D82 H21 J31 J83 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp5917.pdf (application/pdf)

Related works:
Working Paper: Anti-discrimination Legislation and the Efficiency-Enhancing Role of Mandatory Parental Leave (2016)
Working Paper: Anti-discrimination Legislation and the Efficiency-Enhancing Role of Mandatory Parental Leave (2016)
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:ces:ceswps:_5917

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe (wohlrabe@ifo.de).