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

• We study a setting where anti-discrimination legislation gives rise to adverseselection in the labor market. Firms rely on nonlinear compensation contracts toscreen workers who differ in their family/career orientation. This results in a labormarket equilibrium where career-oriented workers are offered an inefficientlylow duration of parental leave. In addition, family-oriented workers are offeredlower wages as compared to their equally skilled career-oriented counterparts. Wedemonstrate the usefulness of mandatory parental leave rules in mitigating thedistortion in the labor market and derive conditions under which a Pareto improvementis possible. We also characterize the optimal parental leave policy andhighlight the possibility for parental leave legislation to eliminate the wage penaltyof family-oriented workers by supporting pooling employment contracts.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

Nyckelord

anti-discrimination

adverse selection

parental leave

efficiency

Economics

Nationalekonomi

Economics

Publikations- och innehållstyp

vet (ämneskategori)

rap (ämneskategori)