Paid leave laws often backfire

Laws prescribing maternal and child care leave and benefits often backfire on their intended beneficiaries, reducing employer willingness to hire workers expected to take the benefits. That’s not exactly news to those familiar with the economic way of thinking; what’s noteworthy is that it’s something being reported in the New York Times, which cites a law in Spain that entitles parents to ask for reduced hours and has led to a reduced willingness to employ mothers, and a child-care mandate in Chile that has been followed by a decline in starting wages for women, as well as much noncompliance. “A broader analysis of 22 countries found that women were more likely to work when these types of policies are in place, but their jobs more likely to be ‘dead-end’ positions and less likely to be managerial posts.” America’s own Family and Medical Leave Act, often thought to be less burdensome because leave is unpaid, has not been exempt from the logic: “Women are slightly more likely to stay employed, but receive fewer promotions because of the law, according to research cited by the New York Times.” The Times says the “three American states ā€” California, New Jersey and Rhode Island ā€” that offer paid family leave finance it through employee payroll taxes,” which tends to make it a little more explicit that the cost of the benefits is coming largely out of compensation packages. [Nicole Kaeding, Cato; Claire Cain Miller, “The Upshot,” New York Times]

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