Children and the Remaining Gender Gaps in the Labor Market

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This is a paper in the Motherhood Penalty literature.

Citation

Cortés, P. and Pan, J., Children and the Remaining Gender Gaps in the Labor Market. Journal of Economic Literature.

Objective

To show that many of the explanations for the remaining gender gap in earnings/employment stem from the higher penalties women face with having kids relative to those men face

Contribution

This paper provides a well-summarized overview of the current state of knowledge on the role of children/childbirth plays in the gender wage gap in the U.S.

Background

LFP for U.S. women has plateaued at around 75% and even among full time workers women earn around 20% less than men. Gender pay gaps are even more pronounced at the top of the earnings distribution

Data & Key Variables

PSID 1976-2017 waves

Household heads and spouses aged 20-55 who had their first child between ages 20-45

Main outcome variable=annual labor earnings

Methodology

Dynamic Decomposition: Focus on 4 ten year time periods. The mean gender earnings gap in each period=sum of estimated child penalties + the impact of mean differences in background characteristics + the impact of different coefficients on non-child covariates (differential returns by gender)

Event-study

Findings

Background-related inequality accounted for ~13% of the gender gap in the 80s, but has declined. The magnitude of child-related gender inequality has risen over time, both in absolute terms (26% in the 1980s to 32% in the 2000s) and as a proportion of total gender inequality (40% in the 1980s to 70% in the 2000s). By the 2010s, child-related inequality accounts for 2/3 of the total wage gap