Is there a wage cost for employees in family-friendly workplaces? The effect of different employer policies

Abstract

This article assesses the wage impact of different family-friendly employer policies: in-kind or in-cash child-related benefits and flexible work schedule arrangements. We use French matched employee–employer data with a rich set of indicators of family-friendly benefits, and we pay attention to the possible endogeneity of worker–employer matching. Our results show that the provision of in-cash or in-kind benefits is associated with higher wages for women, while flexible work schedules have no significant effect on wages. Our results lead us to reject the hypothesis of compensating wage differentials: women do not appear to face a trade-off between wages and a better work–life balance. Our findings are more in line with the enhancing productivity theory: in-kind benefits reduce the time devoted to household activities and alleviate conflict between professional life and family life, thereby improving women's work effort and productivity. This is not the case for flexible work arrangements, which may be perceived as negatively related to workers’ commitment to their job.