Elsevier

Economics Letters

Volume 118, Issue 2, February 2013, Pages 334-336
Economics Letters

The Family and Medical Leave Act and the labor productivity of parents

https://doi.org/10.1016/j.econlet.2012.11.019Get rights and content

Abstract

The Family and Medical and Leave Act of 1993 in the US expanded workplace provisions for leave-taking by working parents. In this note, I propose a method to estimate the effect of the FMLA on the productivity of working parents using variation in the labor share of income. I find that the FMLA increased parental productivity by an estimated 5 percentage points.

Highlights

► Identifies the effect of family leave policies for the labor productivity of parents. ► Finds that the FMLA increased the relative productivity of parents by 5–8 percent. ► Finds a positive productivity effect of the FMLA for both mothers and fathers.

Introduction

The US Family and Medical Leave Act (FMLA) introduced in 1993 provides employees, who work for firms with at least 50 employees within a radial distance of 75 miles and who meet a qualifying hours threshold, with 12 weeks per year of unpaid leave with full benefits to care for immediate family members who require medical care more than once for the same condition. Parents are more likely than non-parents to be eligible for FMLA leave because sick children trigger FMLA provisions. Yet the consequences of the FMLA for parent-workers are not well understood. This letter quantifies the effect of the FMLA on the labor productivity of an American parent.

There is no time-series data on the uptake of the FMLA by qualifying adults. A BLS response to a Request for Information by Congress in 2007 suggested that the unconditional uptake was between 8% and 17% of all workers in 2005.1 To the extent that a family illness would reflect negatively on their job performance then the FMLA allows workers to exchange permanent income uncertainty for a transitory unpaid leave. Since the absence of the worker is temporary, the firm is also unlikely to face any separation, matching or hiring costs associated with hiring a new worker. Indeed, 90% of firms in one self-report survey reported only small costs due to the FMLA.2 The FMLA may increase labor productivity because workers with a temporary adverse productivity shock who take FMLA leave will no longer be counted in either output or in the labor input data.

FMLA coverage is also more inclusive than maternity or paternity leave. The effect of maternity leave and the FMLA for the labor supply decisions of new mothers has been examined, for example, by Ruhm (1998), Han et al. (2007) and Goodpaster (2010). The point of this letter is that the FMLA provisions, and thus prospective benefits, apply more generally to all parents rather than to just new mothers. I quantify the impact of the FMLA as increasing the relative productivity parents by roughly 5% with a 95% confidence interval of 3%–7%.

Section snippets

Parents and the labor share

Define a worker’s productivity type by ηi such that each unit of effective labor supplied by type i is ηilti at time t. Assume that ηi is observed by the firm but not by the statistician who observes the labor input lti not adjusted for its ‘effectiveness.’ Output is produced using the aggregate labor input ∑iηilti.3 The

The data: family shares of the workforce

I use data from the Annual Social and Economic Supplement to the Current Population Survey (CPS) from the years 1968–2006 provided by the Unicon Research Corporation to construct measures of the labor force disaggregated by family attachment. Parental status is determined by the presence of children in the family unit. In all cases I classify only never-married youth under 18 years of age as children regardless of whether children are identified as ‘own’ children. I use the CPS weights to

The Family and Medical Leave Act

I create a FMLA dummy variable for states, j, and years, t, in which the FMLA applied Dj,tFMLA=1. Since the Act took effect in August 1993, I choose the start date of the policy as 1994. There are 154 state-year cells of post-FMLA observations and 466 state-year cells of pre-FMLA observations.4 Indexing state regions by j and

Conclusion

The introduction of the Family and Medical Leave Act (FMLA) in 1993 increased the workplace productivity of parents relative to non-parents. The estimates in this letter suggest that the FMLA increased the relative productivity of parents by roughly 5 percentage points with a 95 per cent confidence interval of approximately 3 to 7 percentage points.

Acknowledgments

I thank, without implicating, Gregor Smith, Stephen Easton and Krishna Pendakur for comments. I also thank the University of British Columbia for hospitality while this letter was completed. Any errors or omissions are my own.

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