DP15157 Competition and Career Advancement: The Hidden Costs of Paid Leave

Author(s): Julian Vedeler Johnsen, Hyejin Ku, Kjell G Salvanes
Publication Date: August 2020
Keyword(s): career interruptions, Gender Gap, leave of absence, Promotion, ranking, tournament
JEL(s): J16, J22, J24, J31, M51, M52
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15157

Does leave-taking matter for young workers' careers? If so, why? We propose the competition effect-relative leave status of workers affecting their relative standing inside the firm-as a new explanation. Exploiting a policy reform that exogenously assigned four-week paid paternity leave to some new fathers, we find evidence consistent with the competition effect: A worker enjoys a better post-child earnings trajectory when a larger share of his colleagues take leave because of the policy. In contrast, we find no direct earnings effect resulting from the worker's own leave when controlling for their relative leave eligibility status within the firm.