The Implicit Wage Costs of Family Friendly Work Practices

Posted: 24 Jun 2008

See all articles by John S. Heywood

John S. Heywood

University of Wisconsin at Milwaukee

Stanley Siebert

Business School, University of Birmingham; IZA Institute of Labor Economics; Institute of Economic Affairs (IEA)

Xiangdong Wei

Lingnan College

Date Written: April 2007

Abstract

This paper posits that the provision of family friendly practices is, on balance, costly to firms and valuable to workers. As a consequence, we anticipate the emergence of a hedonic equilibrium in which workers provided with such practices face an implicit reduction in their earnings. Using WERS98 linked employer-employee data, we find that workers overstate their access to family friendly practices. We also find a surprisingly high compensating wage differential of around 20%. However, this result depends critically on a treatment model designed to purge typical estimates of the income effect. It is also largely associated with indicators of flexible working schedules and cannot be replicated for workplace nursery support or working at home.

Keywords: JEL classifications: J31, J32

Suggested Citation

Heywood, John S. and Siebert, Stanley and Wei, Xiangdong, The Implicit Wage Costs of Family Friendly Work Practices (April 2007). Oxford Economic Papers, Vol. 59, Issue 2, pp. 275-300, 2007, Available at SSRN: https://ssrn.com/abstract=1150590 or http://dx.doi.org/10.1093/oep/gpm006

John S. Heywood (Contact Author)

University of Wisconsin at Milwaukee ( email )

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Stanley Siebert

Business School, University of Birmingham ( email )

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IZA Institute of Labor Economics

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Institute of Economic Affairs (IEA) ( email )

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Xiangdong Wei

Lingnan College ( email )

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Hong Kong
China

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