Association for Public Policy Analysis & Management

A growing number of states and local governments have begun to consider and adopt paid family leave policies, which allow workers to maintain some portion of their wages while caring for an ill family member or new child. These legislative policies often have broader coverage than company leave policies, which tend to be concentrated among more-skilled workers. Although emerging research has shown that legislative leave policies increase take-up of leave and can have short-term positive impacts on employment and wages, there has been little work on how this mandated benefit may change employer behavior or job dynamics. Paid family leave may raise the cost of labor by affecting adjustment costs of firms (through reassignment of tasks of workers on leave) or reduce it by affecting employer morale, turnover, and productivity, and these forces likely vary across employment contexts. Firms may respond by trying to change whom and how they hire. Using recent state and municipal paid leave policy changes, a near-universe of electronic job postings, and detailed administrative job flow data, we employ difference-in-differences and synthetic control methods to identify the impact of paid family leave policies on advertised skill requirements of job openings and quarterly transitions in hiring and separations. Our approach allows us to investigate the heterogeneity by industry and occupation suggested by theory. Our paper thus provides the first comprehensive look at the effect of broad paid family leave policies on the employer side of the labor market.