The implicit wage costs of family friendly work practices

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. Copyright 2007 , Oxford University Press.