Work in Progress
The Effect of Parental Leave Policies in Labor Markets with Search Frictions (Job market paper) [Download]
I analyze the impact of parental leave policies on fertility and female labor supply in a dynamic discrete choice framework. I stress the importance of labor market risks and the prevalence of temporary work contracts in the childbearing decision. I estimate a dynamic structural model with labor market search frictions based on a rich German panel dataset providing survey measures on job losses and transitions to permanent work contracts, for the time period between 2007 and 2014. Estimates suggest that cutting the parental leave job protection period from three to two years would reduce the total fertility rate (TFR) by about 0.04. Furthermore, it would increase average employment by about 0.3 percentage points. At the same time, increasing the maximum entitlement period of parental leave benefits from one to two years increases the TFR by 0.14, and reduces female employment by 0.4 percentage points. I conclude that parental leave policies can have significant consequences for birth rates, which should be kept in mind when attempting to steer the labor supply of parents. Moreover, policies seem to be more effective at the two-year margin than beyond. Findings are preliminary.
Job Search with Subjective Wage Expectations (w/ Luke Haywood and Amelie Schiprowski)
This paper analyzes how subjective expectations about the returns to job search influence the decision to search. Data on subjective wage expectations show that unemployed individuals strongly anchor their expectations in past wages and do not anticipate depreciating wage offers. We estimate a structural job search model in which subjective expectations about future wages are not constrained to be consistent with reality. Simulations show that the path of search effort changes substantially when individuals are provided with perfect information: during the first 8 months of unemployment, the job finding hazard increases on average by 15 per cent. At later stages of the unemployment spell, individuals become discouraged by the knowledge of lower wage prospects and search less.