EC966 – Assessment 2 – Essay – 2017-2018

Assessment 2: Research-informed policy note

EC966 – Labour Economics

Answers will be precise and concise (while remaining grammatically correct). The number of words for the answer is limited to 1,000 words (please include a word count). For this question, you are free to use the resources from the library.

You have been hired to advise the government of a BRICS country. The government has pledged to create a new policy: “Money for Mothers”. Under the new regime, new mothers can choose to stop working and receive the equivalent of the third of the median wage for a maximum of two years after the child birth. The proponents of the reform assert that the policy will help reduce unemployment (which is quite high) while improving children outcomes. The baseline situation is nothing as such: there is only a minimal maternity leave.

The economic advisor (your boss) does not agree with the view that this policy only has benefits and asks you to write a short and balanced policy note, informed by the latest research on the topic. The note should present all the potential economic consequences of the policy, positive or negative.

When drawing theoretical predictions, you should be precise about which theoretical framework you’re referring to. You should not use any equations in this note but you should use formal reasoning and precise academic references (authors’ names, year, and name of the journal if ambiguous). Vague and unjustified statements will be penalised, as will elements not directly related to the question.