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Bollixly Bad Science On Parental Leave Policies

A new distribution technology isn’t evidence of an increase in demand

We’re told that parental leave policies have little to no effect on the finances of the companies that have workers off parturiting.

This might not be quite the case:

The authors tracked specific employers and employees to see what happened to the former when the latter procreated. The findings are clear cut. Firms saw very little change in the number of hours of work done because they were usually able to respond by hiring temporary staff or increasing the hours of existing employees. Colleagues didn’t seem particularly overworked and there was no effect on the number of sick days taken.

Overall, having an employee on parental leave had little impact on wage costs, sales or the firm’s likelihood of survival.

Obviously, this was specific to Denmark’s (very generous) system. In Britain, many firms do face costs from offering more than the statutory minimum maternity pay but the study should ease the fears of any business dreading a Brexit baby boom.

Hmm, well. In the paper itself we are told this:

From the firm’s perspective, the costs of parental leave are multifold. First, in a paid
parental leave system, absent workers are entitled to receive wage replacement and firms may
have to bear these costs. However, in most high-income countries, employers are not responsible
for paying for wages of workers on leave.

In the case of Denmark, firms are reimbursed for these direct costs.Second, in order to avoid losses in productivity, firms have to either hire new workers or require existing employees to take on additional work. In a frictionless labor market without firm-specific human capital, employers are expected to fully replace workers on leave by hiring other employees at the market wage. In this case, the total costs would be equivalent to the disbursed maternity leave benefits, which then, in the context of Denmark, would be fully reimbursed.

Erm, well, no:

You are entitled to receive maternity benefit, which is a basic benefit paid by the State, when you leave work for maternity leave. However, certain conditions must be met. In addition, you are entitled to full or partial pay during maternity leave, if this is stated in your contract of employment or is agreed in some other way with your employer.


Whether you have the right to get full salary or not during your parental leave in Denmark depends on the agreements that are in place at your workplace. In some cases the employer pays the full salary during part of the period of leave, and in other cases the authority Udbetaling Denmark pays the money. Check with your employer to find out which rules apply in your workplace.

We appear to have at least some evidence that it’s the emplopyer, in some cases, that has to pay the maternity leave. Which means that a paper assuming that all is reimbursed is going to be wrong, isn’t it?

But this paper will be used to prove that maternity leave has no effect upon companies. Which is the way that social science is done these days of course.

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Mr Yan
Mr Yan
4 years ago

As someone who has no offspring, I get mightily pissed off when people swan off on maternity/paternity and I have to pick up the slack. This is a view shared by many others including, bizarrely, people who have children themselves. While hard to quantify financially, it’ll impact productivity if nothing else.

Bloke on M4
Bloke on M4
4 years ago

Companies don’t mind maternity leave. It’s the extended thing that really bothers them. Because that whole “hiring temporary staff” is a big expense. And regarding the thing of other staff taking on the work, that’s fine if you’re a giant company with a call centre, but if you have 2-3 people in your marketing or training team, that isn’t going to work. They aren’t going to take on the extra load.

4 years ago
Reply to  Bloke on M4

really ? multinationals I have worked for had no trouble upping workloads. Staff left, new staff came in until they could bear it no longer. Tims frictionless workforce in effect. Of course company performance kept falling, but the CEOs got their golden parachutes so alls well if customers dont count

John B
John B
4 years ago

What’s that thing about not considering the unseen? Temporary staff cost more because of agency fees and they need to be trained. Being temporary they often don’t stay long, sometimes just a few days or a couple of weeks, or they turn out not to be suitable. So a lot of time is spent in supervision and training, which has a cost. Then inevitably putting right afterwards what they have screwed up, apparent weeks months later when they are no longer there to be asked what they did. And it depends on the size of the company. Small companies suffer… Read more »

Gavin Longmuir
Gavin Longmuir
4 years ago

What is being measured here? It seems the focus is on direct outlay costs to the business, when the focus really should be on any impacts on revenues, profit margins, market share.

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