Working Paper: CEPR ID: DP13317
Authors: Wolfgang Keller; Hale Utar
Abstract: This paper shows that in the presence of labor market shocks, child-bearing and child-rearing have farreaching implications for gender inequality, household specialization and family structure. Using population register data on all births, marriages, and divorces together with employer-employee linked data for Denmark, we show that reduced labor market opportunities due to Chinese import competition lead to a move towards family, with higher rates of fertility, parental leave, and marriage, as well as lower rates of divorce. This move is driven by women, not men. We document substantial long-run earnings losses concentrated on women, and gender inequality increases. The gender-specific effects are due to a woman’s ability to give birth during a fixed period of life–her biological clock. Women have a higher reservation value for staying in the labor market when young, and a negative trade shock induces women to substitute more to family activities than men. High-earning women in their late 30s contribute strongly to the gender difference in fertility because switching to new comparable employment would require high initial commitment which is incompatible with having a newborn in the short time remaining on the biological clock. There is no gender difference (1) for workers past their fertile age, (2) in the size of the negative labor shock, and (3) due to occupational composition since we exploit within-worker variation. Despite lower labor earnings, positive family responses in Denmark are also sustained by insurance payments and government transfers so that workers can afford the shift to family.
Keywords: fertility; earnings; inequality; marriage; divorce; import competition; gender gap
JEL Codes: F16; F66; J12; J13; J16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Chinese import competition (F14) | increased rates of fertility (J13) |
| Chinese import competition (F14) | increased parental leave (J22) |
| Chinese import competition (F14) | increased marriage rates (J12) |
| Chinese import competition (F14) | decreased rates of divorce (J12) |
| reduced labor market opportunities (J79) | increased rates of fertility (J13) |
| reduced labor market opportunities (J79) | increased parental leave (J22) |
| reduced labor market opportunities (J79) | increased marriage rates (J12) |
| reduced labor market opportunities (J79) | decreased rates of divorce (J12) |
| negative labor market conditions (J63) | prioritization of family formation (J12) |
| family responses (J12) | sustained by government transfers and insurance payments (H55) |
| labor market adjustments (J48) | not gender-neutral (J16) |