Parental leave, worker substitutability, and firms’ employment

HIGHLIGHTS

• What: Based on linked employer-employee data from Germany the authors examine how more generous leave benefits affect firm-level employment and hiring decisions. Focusing on small- and medium-sized firms the authors show that more generous benefits reduce firm-level employment in the short term which is driven by firms with few internal substitutes for the absent mother. To rationalise the findings the authors show that replacement hiring occurs largely before the expected absence and that firms hire more external replacements when fewer internal substitutes are available. Using administrative linked employer-employee data from Germany, the . . .
  

   

  

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