Scandinavian Working Papers in Economics
Working Paper Series,
Uppsala University, Department of Economics
No 2016:7: Anti-discrimination Legislation and the Efficiency-Enhancing Role of Mandatory Parental Leave
Spencer Bastani (), Tomer Blumkin () and Luca Micheletto ()
Additional contact information
Spencer Bastani: Departmentof Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Tomer Blumkin: Department of Economics, Ben Gurion University, Israel
Luca Micheletto: Department of Economics, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
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
44 pages, May 20, 2016
Full text files
FULLTEXT01.pdf
Questions (including download problems) about the papers in this series should be directed to Ulrika Öjdeby ()
Report other problems with accessing this service to Sune Karlsson ().
RePEc:hhs:uunewp:2016_007This page generated on 2024-09-13 22:17:38.