In the US, measures such as the Family and Medical Leave Act can help parents, especially women, balance career and family responsibilities. In new research, Fariha Kamal, Asha Sundaram and Cristina J. Tello-Trillo look at how family leave policies can affect women’s employment during difficult economic times. They find that when firms that are required to provide job-protected family leave faced increased competition for their products from Chinese imports, they were less likely to employ women, and promote women.
Family leave policies can enable women to balance career and family responsibilities, so it’s not surprising that most advanced countries guarantee maternity leave for mothers around childbirth. These policies are associated with women taking more parental leave and improved outcomes for children.
However, these policies impose costs on employers, which may need to pay for temporary replacements or may lose out on the investments they make in training employees who might not return to their job after taking leave. These costs could be especially burdensome during economic downturns. With climate change and political conflicts causing more frequent global economic crises, it is crucial to understand how these crises affect the impacts of family leave policies on jobs for men and women.
US family leave policies and manufacturing decline
In new research, we focus on the US Family and Medical Leave Act (FMLA) and its effects on labor market outcomes for women relative to men in the context of an trade “shock” – a shift in economic conditions because of a change in trade with another country, in this case, China. FMLA is a federal law related to parental leave in the US, providing new parents with 12 weeks of unpaid, job-protected leave. Firms employing more than 50 workers in a 75-mile radius are mandated to provide leave under the FMLA (which we call “FMLA firms”). Using data on all private sector employers from the United States, we show that greater import competition from China, which meant significantly less demand for the products of US-based manufacturing firms, decreases the female share of employment at FMLA firms relative to others.
Photo by Sai De Silva on Unsplash
In Figure 1 below, the vertical axis plots mean female share of employment at firms of varying sizes as measured by the total number of workers plotted on the horizontal axis. The left (right) panel focuses on firms facing a low (high) exposure to changes in Chinese import penetration, which captures the extent of import competition from China. Firms to the right of the 50-worker cutoff are FMLA firms, or firms that are required to provide job-protected family leave. While for firms facing low exposure (left panel), there is no strong evidence of a ‘jump’ in the female share of employment at the 50-worker FMLA threshold, we do see a sharp decrease in the female share of employment at the threshold for firms facing high exposure (right panel). Under the assumption that firms to the left and right of the 50-worker threshold are similar in most ways except their FMLA status, we can attribute this decrease in the female share of employment at high exposure firms to the FMLA leave mandate. We find similar patterns for the female share of earnings and promotions.
Figure 1 – Change in female share of employment and exposure to Chinese import penetration
Notes: High exposure is when the change in import penetration from China is greater than the 75th percentile, and low otherwise. Source: Author’s calculations using LEHD and LBD databases, US Census Bureau
Employer responses
Our research suggests that negative trade shocks, which decrease demand for workers, can disproportionately impact female employees at FMLA-covered companies. Specifically, we find that there are more separations of and fewer promotions for female employees compared to their male counterparts in these companies during such economic downturns.
We leverage the data to explore whether these negative effects on relative outcomes for women differ across groups and types of employers. We find that the effects are driven by women in prime childbearing ages and without college degrees. Further, they are primarily relevant for employers without any female managers, defined as employers where none of the top three earners are female.
Family leave policies may make existing gender inequalities worse
Our research highlights the interaction between trade and labor market policies. We show that family leave mandates may exacerbate gender inequalities, especially in the face of negative shocks to the economy. While more research is needed to pin down the exact mechanisms underlying this finding, our research underscores the role played by gender norms in determining relative labor market outcomes for women.
If women are relatively more likely to take advantage of family leave policies, and more so when labor market opportunities are scarce during economic downturns, employers may perceive greater costs, or fewer gains from employing them. In settings where rigid gender norms assign caregiving responsibilities primarily to women, these effects are likely to be magnified. Increasing representation of women in senior management and designing flexible workplace policies that allow individuals to better manage caregiving and career responsibilities can ensure that women are not particularly disadvantaged during stressed economic times.
- This article is based on the paper, ‘Family-Leave Mandates and Female Labor at U.S. Firms: Evidence from a Trade Shock’, in The Review of Economics and Statistics.
- Please read our comments policy before commenting.
- Note: This article gives the views of the author, and not the position of USAPP – American Politics and Policy, nor the London School of Economics.
- Shortened URL for this post: https://wp.me/p3I2YF-dY4
