Parental Preferences and the Motherhood Penalty

The motherhood penalty is a major source of gender inequality, yet it varies substantially across women. We exploit the random gender of the firstborn in Finnish register data to study how parental preferences for family time interact with occupational constraints to generate this heterogeneity. We document a consistent preference for daughters across education groups, reflected in fertility behavior and maternal leave duration. Despite similar preferences, long-run labor market consequences differ sharply by maternal education. Ten years after birth, university-educated mothers experience a 10% larger earnings penalty when their first child is a son, whereas less educated mothers incur a 5% larger penalty when the first child is a daughter. These differences are consistent with lower employment among non-tertiary-educated women and with job sorting into more family-friendly positions among tertiary-educated women following the birth of a firstborn daughter. Our findings show that parental preferences, mediated by education-specific labor market opportunities, generate substantial heterogeneity in the motherhood penalty.