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QuestionsPerverse Incentives

Single choice · #239

A local regulation requires companies to pay full salaries to female employees on maternity leave, extending the leave from 3 months to 6 months, with the cost borne entirely by the company. From a multi-level logical perspective, what is the most likely consequence of this policy?

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Answer: B

  • AWomen's burden of childbirth is significantly reduced, and the employment environment becomes better instead.✗ This is first-level logic that only sees the direct benefit. When welfare costs are borne by companies, they will inevitably incorporate this cost into hiring decisions.
  • BCompanies will reduce hiring women who may give birth, making it harder for some women to find employment.✓ Correct. After companies bear the cost of maternity leave, they will adjust hiring behavior to avoid the cost, possibly reducing recruitment of women of childbearing age or shifting to short-term contracts. A well-intentioned policy may backfire.
  • CCompanies will proactively fulfill social responsibility and thereby enhance their brand image.✗ This is a wishful hope that ignores the reaction of the cost-bearer. A few companies might have such willingness, but as a general policy outcome, competitive pressure will lead most companies to avoid the cost.
  • DWomen's willingness to give birth will inevitably increase because all protections are more complete.✗ This oversimplifies the causes of fertility intention. Increased difficulty in employment brings economic pressure, which may actually lower fertility intention. This is a one-step inference misunderstanding.
Explanation:The first step of the policy gives female employees more paid leave; the second step is that companies bear additional costs; the third step is that companies will reduce hiring women with potentially high childbirth costs. Consequently, women face harder employment, and the policy's intention and outcome are reversed. The key is to identify that whoever bears the cost will react.
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