The effect of parental leave duration on early-career wage growth

Work–family policies are meant to support labor force participants, but they often result in lower rewards for those who use them. Based on the ideal worker norm framework and signalling theory, we hypothesise that parental leave duration will result in lower wage growth, above and beyond that of having children. The 1997 National Longitudinal Survey of Youth data from 2000 to 2015 are used to test the hypotheses with a longitudinal sample (14 waves) of individuals in the United States who worked before and after taking parental leave (n = 6723). Discontinuous growth models are used to predict the penalty for parental leave duration for men and women. We find that both men and women suffer from a lower hourly wage growth for taking longer parental leave and that there are more severe penalties for taking paid parental leave than taking unpaid parental leave. Practitioner notes What is currently known?

• utilization of parental leave is significantly related to the wellbeing of employees and their families.
• However, employees are penalized for taking parental leave.

What this study adds?

• Paid parental leave, which is mostly available to skilled, professional employees carries a noticeable early-career wage penalty, but the use of unpaid leave, does not.
• Both men and women are penalized for taking parental leave, but the longer parental leaves women take increase the gender pay gap.

Implications for practitioners:

• HR practitioners should monitor whether employees are penalized for taking parental leave.
• HR practitioners should try incentivizing male employees to take parental leave that is comparable to the one taken by their female employees.

     

Corporate Endowment Insurance Fee Reduction and Employee Wages: Evidence from China

To stimulate economic growth, the Chinese government implemented three consecutive policies between 2016 and 2019 to reduce the corporate endowment insurance contribution ratio (CEICR), the highest payment item for Chinese companies. Using China's CEICR reduction policies as a quasi-natural experiment, this paper evaluates the impact of corporate payment burden reduction on employee wages. Generally, reducing CEICR appears to prompt companies to increase employee wages. Corporate cash flow is a possible channel of influence. Moreover, the positive effect is found to be more pronounced in companies that are more labor intensive, performing better in labor payment compliance, and located in regions with higher pressure for elderly care. This paper offers evidence in favor of implementing CEICR reduction policies from the perspective of improving the well-being of employees.     

Contraction under minimum wages? Operational and financial advantages of multinational subsidiaries in China

The advantages of multinational enterprises (MNEs) over domestic firms have been widely acknowledged in several streams of literature. However, a more refined analysis on the sources of their advantages is lacking. Exploiting minimum wage hikes in China as an exogenous shock, we theorize that, due to multinational advantages, the employment of multinational subsidiaries may be less affected by minimum wages than that of domestic firms, and that their multinational advantages arise from both operational and financial advantages. Using nation-wide longitudinal firm data from 1998 to 2007 and border discontinuity design (BDD) to estimate the causal effects, we find supportive evidence for our hypotheses. We contribute to the literature on multinational advantages and minimum wages.