Which work arrangements do mothers prefer, and how do these work arrangements affect the child penalty they experience? The Australian 2009 Fair Work Act explicitly entitled parents of young children to request a (reasonable) change in work arrangements. Leveraging variation in the timing of the law, timing of childbirth, and the bite of the law across different occupations and industries, we establish two main results. First, if allowed to request a change in work arrangements, new mothers ask for regularity in their schedule. Second, with regular schedules, working mothers' child penalty declined from a 47 percent drop in hours worked to a 40 percent drop. For the most exposed mothers, the Fair Work Act led to both a doubling in schedule regularity, and a 30% decrease in the child penalty in hours of work.
We study the impact of employment protection legislation (EPL) on firms’ innovation, through an event-study analysis of labor market reforms occurring in Europe over 2000-2016. Data from the Community Innovation Survey reveal that substantial drops in EPL for temporary workers prompt a reallocation of innovation towards the introduction of new products, away from process innovation aimed at cutting labor costs. Among innovative firms, the share of product innovators increases by 15% of the pre-reform value, while the share of firms specializing in process innovation falls by 35%. We develop a theoretical framework of directed technical change to rationalize our findings.
Optimal Labor Income Taxation in the Assortative Matching Model
[2015, draft available upon request]
I consider an assortative matching model in which workers who differ in ability match with firms which differ in size. I first extend the original (Beckerian) model in order to account for endogenous labor supply choice, and show that in this case positive assortative matching is optimal when the firms' production function is supermodular and the worker cost of effort function is submodular, or vice-versa. I then derive the optimal linear tax rate in presence of assortative matching, and compare it with the tax rate in Rothschild and Scheuer's (2011) Self-Confirming Policy Equilibrium (SCPE), the tax policy believed to be optimal by a government that assumes a frictionless labor market with exogenous wages. I show that the rigidities introduced by assortative matching make the optimal linear tax rate generally larger than the one in the SCPE when the effect on firms' profits is not taken into account (partial equilibrium), but the optimal linear tax rate is typically smaller than the one in the SCPE when general equilibrium effects are considered.