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Chutes and Ladders: Dual Tracks and the Motherhood Dip

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Author Info

  • Fernández-Kranz, Daniel

    () (IE Business School, Madrid)

  • Lacuesta, Aitor

    () (Bank of Spain)

  • Rodríguez-Planas, Núria

    () (IZA and IAE-CSIC)

Abstract

Using rich panel data recently available from Spanish Social Security records, we find that a negative motherhood earnings differential of 2.3 log points remains even after controlling for both individual- and firm-level unobserved heterogeneity. The analysis of the mothers and childless women's earnings trajectories over time reveals that "mothers to be" experience important earnings increases (of up to 6 log points) several years prior to giving birth to their first child. However, this earnings' advantage gets seriously hit right after birth, and it is not until nine years later that mothers' earnings return to their pre-birth (relative) levels. The study finds that heterogeneity matters as most of the motherhood penalty and earnings' dip is driven by mothers working in the primary labor market (with permanent contracts). For these women, much of the earnings losses occur because mothers change employers to work part-time, or (if they stay with their former employer) they take leave of absence. An instrumental variable approach is used to address concerns of selection into type of contract. We exploit variation in the amount, timing and profiling of subsidies offered to firms when hiring permanent workers, a policy that started to be implemented in Spain in 1997.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5403.

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Length: 55 pages
Date of creation: Dec 2010
Date of revision:
Publication status: forthcoming as 'The Motherhood Earnings Dip: Evidence from Administrative Data 'in: Journal of Human Resources
Handle: RePEc:iza:izadps:dp5403

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Related research

Keywords: earnings trajectories; individual- and firm-level fixed-effects estimator; permanent and fixed-term contracts; underlying channels;

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References

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  1. Cristina Barceló & Ernesto Villanueva, 2010. "The response of household wealth to the risk of losing the job: evidence from differences in firing costs," Banco de España Working Papers 1002, Banco de España.
  2. Yolanda F. Rebollo & J. Ignacio Pérez, 2008. "The use of permanent contracts across Spanish regions: Do regional wage subsidies work?," Economic Working Papers at Centro de Estudios Andaluces E2008/09, Centro de Estudios Andaluces.
  3. Gubta, Nabanita Datta & Smith, Nina, 2000. "Children and Career Interruptions: The Family Gap in Denmark," CLS Working Papers 00-3, University of Aarhus, Aarhus School of Business, Centre for Labour Market and Social Research.
  4. McKinley L. Blackburn & David E. Bloom, 1990. "Fertility Timing, Wages, and Human Capital," NBER Working Papers 3422, National Bureau of Economic Research, Inc.
  5. Mario García-Ferreira & Ernesto Villanueva, 2007. "Employment risk and household formation: evidence from differences in firing costs," Banco de España Working Papers 0737, Banco de España.
  6. Catalina Amuedo-Dorantes & Jean Kimmel, 2005. "“The Motherhood Wage Gap for Women in the United States: The Importance of College and Fertility Delay”," Review of Economics of the Household, Springer, vol. 3(1), pages 17-48, 09.
  7. Sara Rica & Amaia Iza, 2005. "Career Planning in Spain: Do Fixed-term Contracts Delay Marriage and Parenthood?," Review of Economics of the Household, Springer, vol. 3(1), pages 49-73, November.
  8. Catalina Amuedo-Dorantes, 2000. "Work transitions into and out of involuntary temporary employment in a segmented market: Evidence from Spain," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(2), pages 309-325, January.
  9. Brownstone, David & Valletta, Robert G, 1996. "Modeling Earnings Measurement Error: A Multiple Imputation Approach," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 705-17, November.
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