Law, Economics and Culture : Theory of Mandated Benefits and Evidence from Maternal Leave Policies

Why do some countries mandate a long maternity leave, while others mandate only a short one? In a standard mandated benefits model mandated maternity leave makes hiring women more costly, and therefore reduces women's employment and real wages. We incorporate into the standard model society's tolerance of gender based discrimination, showing that the optimal length of maternity leave depends on it. The less tolerant society is of gender based discrimination the longer the maternity leave it will mandate. Relying on recent research in psychology and linguistics according to which patterns in languages offer a window into their speakers' dispositions, we collected new data on the number of gender differentiated personal pronouns across languages, to capture societies' attitudes towards gender based discrimination. We first confirm, using within country language variation, that our linguistic measure is indeed correlated with attitudes towards gender based discrimination. Then, using cross-country data on length of maternity leave, while controlling for political, economic and demographic parameters, we find a strong correlation between our language based measure of attitudes and the length of maternity leave