What Works for Working Couples? Work Arrangements, Maternal Labor Supply, and the Division of Home Production

We provide the first causal evidence that changes to work arrangements – in the form of greater schedule regularity – can reduce the child penalty in earnings for women. The Australian 2009 Fair Work Act explicitly entitled parents of young children to request a change in work arrangements. Leveraging variation in the timing of the law, timing of childbirth, and the bite of the law across different occupations and industries, we establish three main results. First, new mothers used the Fair Work Act to maintain a regular schedule while reducing hours upon childbirth. Second, thanks to increased regularity, working mothers’ child penalty declined from a 47 to a 38 percent drop in hours worked. Third, while this increase in maternal labor supply implies a significant shift towards equality in the female- and male-shares of household income, we do not observe any changes in the female share of home production.