Family-Friendly Workplace Reform: Prospects for Change

Abstract

The recent surge of women and mothers into the workforce has generated a call for changes that make it easier to combine employment with family life. Because neoclassical economic theory assumes that existing workplace structures are efficient, suggestions for reform have encountered resistance on the grounds that familyfriendly reforms will prove costly for firms and society as a whole. In particular, so-called “accommodation mandates,” which require employers to extend benefits like paid leave and job protection to parents, have been attacked as potentially inefficient and as harmful to those they are designed to help. This article challenges the suggestion that existing arrangements maximize social welfare and that family-friendly reforms will undermine efficiency. Using dynamic game-theoretic models, it explains how management-worker interactions can get stuck in equilibria that generate less wellbeing overall than more family-friendly alternatives, and it shows how family-friendly arrangements may be difficult to maintain despite their potential for making everyone better off. The article speculates on measures that might foster the adoption and stability of family-friendly workplace forms.