The Impact of Paid Leave on Female Employment Outcomes

Abstract

This paper provides evidence on the impact of paid leave legislation on female employment outcomes. Using a difference-in-differences and difference-in-difference-in-differences strategy, I study the impact of two state-level programs in California and New Jersey. This paper is first to exploit the fact that the cost of paid leave in these states is larger for firms with 50 or more employees (who are forced to offer job protection under the federal FMLA) than for firms with 49 or fewer employees. Comparing firms above and below this cutoff, I estimate that paid leave with job protection reduces female hiring by around 1.15 percent in large firms compared to small firms where leaves are unprotected. Women of child-bearing age are most negatively impacted (hiring falls by around 2 percent), as are female employees in industries that are relatively less human capital intensive, like utilities and accommodation and food services.