Early Career Setbacks and Women’s Career-Family Trade-Off

We study how early career setbacks—in the form of worse initial job matches—have permanent labor and marriage market impacts differentially for males and females. We analyze the Danish physician labor market and exploit a randomized lottery that determines sorting into internships, which differ in the bundle of location and career opportunities they provide. Using administrative data for over fifteen years after the lottery experiment, we find that initial labor market sorting has important long-run effects on occupational choice and career trajectories for women only, which increases the gender earnings gap by 10-15 percent over the decades after graduation from medical school. We show that the differential gender sensitivity to setbacks is driven by women’s career-family trade-off, where women exhibit earlier and higher fertility and subsequently sort into more flexible but lower-paying jobs that facilitate their greater family responsibilities. Our findings have implications for policies aimed at gender equality, as they reveal how persistent gaps can arise even in settings with institutional equality of opportunity and they point to addressing family considerations and job flexibility as key channels.