Is the Road to Unemployment Paved with Good Intentions? Labor Market Outcomes of Young Women

The primary objective of the California Paid Family Leave (CA-PFL) program is to ease the burden of parenthood. One unintended consequence is that employers may bear the cost of the CA-PFL program and respond by changing their demand for those most likely to take-up the policy. I examine how the employment and wages of women of childbearing age (i.e., young women) change relative to men of the same corresponding age group (i.e., young men) in response to the enactment and to the implementation of the program. Exploiting variation in paid family leave access across industries and firm sizes, I find the CA-PFL program decreases employment for young women compared to young men by approximately 2.0% across industries and 3.0% across firm sizes. Furthermore, I find that younger women experience a statistically significant 0.2% decrease in wages relative to young men across industries and no significant change in wages when compared to young men across firm sizes. In conclusion, most women enjoy the benefits of paid family leave, but a few young women are unable to attain employment.