Working Paper: CEPR ID: DP8697
Authors: Jerome Adda; Christian Dustmann; Katrien Stevens
Abstract: This paper analyzes the life-cycle career costs associated with child rearing and decomposes their effects into unearned wages (as women drop out of the labor market), loss of human capital, and selection into more child-friendly occupations. We estimate a dynamic life-cycle model of fertility, occupational choice, and labor supply using detailed survey and administrative data for Germany for numerous birth cohorts across different regions. We use this model to analyze both the male-female wage gap as it evolves from labor market entry onward and the effect of pro-fertility policies. We show that a substantial portion of the gender wage gap is explainable by realized and expected fertility and that the long-run effect of policies encouraging fertility are considerably lower than the short-run effects typically estimated in the literature.
Keywords: fertility; gender wage gap; labour supply; occupational choice
JEL Codes: J13; J22; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fertility (J13) | wage differentials (J31) |
| fertility (J13) | labor supply reductions (J20) |
| labor supply reductions (J20) | unearned wages (J31) |
| fertility (J13) | human capital accumulation (J24) |
| fertility choices (J13) | wage gap (J31) |
| pro-fertility policies (J18) | long-run effects on wages (J39) |