Children and the Remaining Gender Gaps in the Labor Market
Author Patricia Cortes
Author Jessica Pan
Abstract The past five decades have seen a remarkable convergence in the economic roles of men and women in society. Yet, persistently large gender gaps in terms of labor supply, earnings, and representation in top jobs remain. Moreover, in countries like the U.S., convergence in labor market outcomes appears to have slowed in recent decades. In this article, we focus on the role of children and show that many potential explanations for the remaining gender disparities in labor market outcomes are related to the fact that children impose significantly larger penalties on the career trajectories of women relative to men. In the U.S., we document that more than two-thirds of the overall gender earnings gap can be accounted for by the differential impacts of children on women and men. We propose a simple model of household decisionmaking to motivate the link between children and gender gaps in the labor market, and to help rationalize how various factors potentially interact with parenthood to produce differential outcomes by gender. We discuss several forces that might make the road to gender equity even more challenging for modern cohorts of parents, and offer a critical discussion of public policies that seek to address the remaining gaps.
IZA Paper Notes:
Objective: This paper provides a well-summarize 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 difference coefficients on non-child covariates (differential returns by gender)
Event study
Results: 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
Comments: Wage model excludes experience, which could be important in determining wage levels post-birth
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