Title: Maternity Leave and Labour Market Outcomes
Discussant: Mitali Nikore

We conducted the 22nd Consumer Pyramids Research Seminar on October 6th 2022 at 6:30 PM IST.

Event Summary:

Purna Banerjee (RBI) and Shreya Biswas (BITS Pilani) presented their research on the role of maternity leaves on labour market outcomes. Theirs is a pioneering study on the impact of maternity benefits policy on wages and employment of women in India.

The gender gap in the labour market is acknowledged by literature and policy worldwide. However, research on the factors driving this gap remains inconclusive. Maternity leave is a factor that separates women from their male counterparts in the labour market. Literature on the role of this ‘maternity shock’ is scarce, and existing research is focused predominantly on developed countries. The authors stated this as their motivation to investigate the impact of the Maternal Benefits Act Amendment of 2017, on labour market outcomes of Indian women in the high fertility age group (18-25 years).

The authors employed a difference-in-differences strategy on CPHS panel data to compare the wages and likelihood of employment of men and women during the pre-reform and post-reform period. They controlled for various factors such as age, education, caste, household income, household size, and number of children in the household. They described the introduction of a ‘pseudo-reform’ variable to account for the effect of any time-varying differences in labour market outcomes between men and women. The authors also presented a theoretical model that uses the search and matching friction method to identify the impact of a maternity shock on outcomes for men and women with and without policy intervention.

Overall, the researchers found that policy reform extending maternal benefits had a negative impact on the employment and wages of women. This effect was greater in the high-education and high-skill occupation groups. The also observed that even in the absence of mandated maternity leave policies, women experience lower employment and wages compared to males. This is exacerbated when firms have to bear the cost of maternal benefits, which is the case in India.

Mitali Nikore of Nikore Associates served as discussant for the paper. Nikore highlighted the importance of studying the role of demand-side constraints in the decline of women’s labour force participation in India. She stressed on the public health and welfare benefits of well-designed maternity leave policies. Nikore outlined policy recommendations based on the paper, such as introducing more equitable parental or paternity leave policies and providing compensation for firms, who bear the entire cost of maternity benefit policies. She also suggested the researchers delve further into aspects other than maternity leave such as the provision of creche facilities, that are mandated in the policy as well.

The session was attended by an audience of around 60 participants. The authors responded to all questions and comments throughout the presentation.

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