Many governments are making attempts to increase fathers' share of parental leave in order to correct for unequal labor market outcomes. Using Swedish data, we ask whether fathers can be encouraged to take more parental leave in order to mitigate the negative consequences of mothers' career...

We study a labour market in which firms can observe workers’ output but not their effort, and in which a worker’s productivity in a given firm depends on a worker-firm specific component, unobservable for the firm. Firms offer wage contracts that optimally trade off effort and wage costs. As...