Does Earlier Return to Work Help Mothers' Career? Evidence via the Substitution Effect of Parental Leave
(joint with Anikó Bíró, Tímea Laura Molnár and Zsigmond Pálvölgyi)
We identify the substitution effect in paid parental leave (`PL'), by exploiting a Hungarian reform that affected only the possibility of employment during the receipt of PL benefits, while keeping the overall benefit amounts unchanged. Mothers whose child turned into their $2^{nd}$ year of age after 2014 were provided strong incentives to return to the labor market earlier than previous cohorts, since they did not have to give up PL benefits while earning their wage income during their children's $2^{nd}$ year of age. Using an Event Study research design and linked employer-employee data, we find that mothers in eligible cohorts were by 3 percentage points (30 percent) more likely to work 19--24 months after giving birth, without further differences in their working propensities. We find significant effects on mothers' wages and on their firms' average wage premium 3--5 years after giving birth for those who gave birth at an older age and live in the capital -- these results are due to eligible mothers being more likely to stay at the same firm and being less likely to switch `down' to lower-paying firms. We also find that eligible mothers sort to occupations that require less analytical thinking, stress tolerance, leadership and willingness to take on responsibilities, and involve less time pressure.
The Incentive Effects of Sickness Benefit for the Unemployed – Analysis of a Reduction in Potential Benefit Duration
(joint with Márton Csillag)
We analyze the impact of a unique ``sickness benefit for the unemployed'' on benefit claiming and employment. In Hungary, employees could claim sickness benefits within three days of losing their job, which enabled them to extend their potential benefit duration by 90 days during their nonemployment spell. This provided a huge incentive to report sick at the onset of unemployment. In 2007, the maximum number of days of “sickness benefit for the unemployed” was halved. First, we demonstrate that higher-income individuals and workers with longer employment histories were more likely to claim sickness benefits, even when controlling for various health variables. These groups benefit most from using sickness benefits instead of unemployment benefits. Second, we find that a large portion of lost sickness benefit days were substituted by taking unemployment insurance benefits. Third, we demonstrate that the reform decreased the job-finding rate right after the pre-reform maximum duration and increased the job-finding rate right after the new maximum.
Firm Heterogeneity and the Impact of Payroll Taxes
(joint with Anikó Bíró, Réka Branyiczki, Attila Lindner and Dániel Prinz)
We study the impact of a large payroll tax cut for older workers on employment and wages in Hungary. By exploiting administrative data and applying a difference-in-differences empirical strategy, we document a modest employment increase equivalent to a labor demand elasticity of -0.3 and pass-through rate of 22\%. These average effects mask large heterogeneity across firms. Employment mainly increases at low-productivity, low-paying firms, while no jobs are created at high-productivity, high-paying firms. At the same time, the tax cut is passed through to wages at high-productivity, high-paying firms, while low-productivity, low-paying firms do not share the benefits of the tax cut with their workers. These results point to important heterogeneity in the incidence of payroll tax cuts across firms, highlighting that workers at different firms benefit differently from payroll taxes. They also demonstrate that payroll taxes can have a significant impact on the composition of jobs in the labor market.
Work in Progress:
Does a Stricter Criminal Code Lead to Stricter Prison Sanctions?
(joint with Csaba Győry and Balázs Váradi)