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The Effect of Work-Family Policies on Female Employee Attrition and Firm Profitability
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The Effect of Work-Family Policies on Female Employee Attrition and Firm
Profitability
Annalisa Mastri
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Abstract: This paper investigates how work-family policies are linked to the attrition of female employees and firm profitability. Using longitudinal data on approximately 1,400 law firms over ten years, we estimate models with firm fixed effects that allow credible estimation of these relationships in the presence of firm heterogeneity. There are three main findings. First, we find that Employee Assistance Plans, dependent care flexible spending accounts, and emergency child care are associated with increases in the percentage of associates who are female. Second, these policies are linked to reductions in the turnover rates of associates. This, combined with the first finding, indicates that work-family policies help retain female employees. Third, by linking a subset of the firm-level data to supplemental data on firm profitability over the same period, we also show that providing such benefits does not hurt firm profitability or lead firms to go out of business.
The results of the study are generalizable to other large firms with similar
organizational structures and a similar workforce composition, such as consulting and accounting firms. Overall, these findings suggest that firm provision of work-family policies can play an important role in retaining female employees without hurting firm profitability.
1
This paper represents part of my dissertation research. I am grateful for helpful comments from Myra
Strober, Kathryn Shaw, Jonah Berger, and participants in the quantitative workshop for research on gender at Stanford University.
1
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| | Authors: Mastri, Annalisa. |
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The Effect of Work-Family Policies on Female Employee Attrition and Firm
Profitability
Abstract: This paper investigates how work-family policies are linked to the attrition of
female employees and firm profitability. Using longitudinal data on approximately 1,400
law firms over ten years, we estimate models with firm fixed effects that allow credible
estimation of these relationships in the presence of firm heterogeneity. There are three
main findings. First, we find that Employee Assistance Plans, dependent care flexible
spending accounts, and emergency child care are associated with increases in the
percentage of associates who are female. Second, these policies are linked to reductions
in the turnover rates of associates. This, combined with the first finding, indicates that
work-family policies help retain female employees. Third, by linking a subset of the
firm-level data to supplemental data on firm profitability over the same period, we also
show that providing such benefits does not hurt firm profitability or lead firms to go out
of business.
The results of the study are generalizable to other large firms with similar
organizational structures and a similar workforce composition, such as consulting and
accounting firms. Overall, these findings suggest that firm provision of work-family
policies can play an important role in retaining female employees without hurting firm
profitability.
1
This paper represents part of my dissertation research. I am grateful for helpful comments from Myra
Strober, Kathryn Shaw, Jonah Berger, and participants in the quantitative workshop for research on gender
at Stanford University.
1
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