Hidden Benefits and Costs of Parental Leave

The paper presented in this ZEW Research Seminar examines whether and to what extent a female coworker’s parental leave increases the workload of remaining employees and affects their job satisfaction. Using personnel records from a large Japanese manufacturing firm, the authors estimate the causal effects on team members’ monthly overtime hours using an event-study difference-in-differences approach.
They find that coworkers’ overtime hours do not increase substantially, rising by only about one additional hour per worker per month on average. The increase is concentrated among coworkers at higher job levels than the leave taker and among male coworkers. Moreover, the increase is statistically significant only when the leave duration is shorter than the median.
The limited increase in overtime can largely be explained by the firm’s staffing practices, under which teams often receive replacement workers in advance of the leave period. Responses from employee engagement surveys further provide suggestive evidence that coworkers—especially female coworkers—experience personal growth and improved workplace communication following a colleague’s parental leave.