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Oxford Economic Papers Advance Access originally published online on March 21, 2007
Oxford Economic Papers 2007 59(2):275-300; doi:10.1093/oep/gpm006
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Right arrow J31 - Wage Level and Structure; Wage Differentials
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© Oxford University Press 2007 All rights reserved

The implicit wage costs of family friendly work practices

John S. Heywood*, W. Stanley Siebert{dagger}, and Xiangdong Wei{ddagger}

*Department of Economics, University of Wisconsin-Milwaukee
{dagger}Birmingham Business School, University of Birmingham, Edgbaston, Birmingham B15 2TT; e-mail: w.s.siebert{at}bham.ac.uk
{ddagger}Department of Economics, Lingnan University, Hong Kong


  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.

Key Words: JEL classifications: J31 • J32


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