November 29, 2002

Leave and the labour market

In this document we analyse the macro-economic effects of introducing (better) paid parental leave and long-term leave for family reasons.

Simulations with MIMIC suggest that paid leave discourages overall labour supply and output. Hence, it is difficult to motivate paid leave policies as a way to boost overall labour supply.

However, the government may have other reasons to introduce paid leave programs. Paid leave may reduce credit constraints fro care givers. Furthermore, a collective paid leave arrangement allows the government to redistribute income towards partners and/or low-income earners. Also, paid leave may stimulate informal care relative to formal care.

This publication is in Dutch.


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