The Welfare-Enhancing Role of Parental Leave Mandates

Abstract A major factor that contributes to persistent gender variation in labor market outcomes is women’s traditional role in the household. Child-related absences from work imply that women accumulate less job experience, are more prone to career discontinuities and, hence, suffer a motherhood penalty. We highlight how the gender-driven career/family segmentation of the labor market may create a normative justification for parental leave rules as a means to enhance efficiency in the labor market and alleviate the gender wage gap. (JEL D82, H21, J31, J83)