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Chutes and Ladders: Dual Tracks and the Motherhood Dip

Author

Listed:
  • Fernández-Kranz, Daniel

    () (IE Business School, Madrid)

  • Lacuesta, Aitor

    () (Bank of Spain)

  • Rodríguez-Planas, Núria

    () (Queens College, CUNY)

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.

Suggested Citation

  • Fernández-Kranz, Daniel & Lacuesta, Aitor & Rodríguez-Planas, Núria, 2010. "Chutes and Ladders: Dual Tracks and the Motherhood Dip," IZA Discussion Papers 5403, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5403
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    References listed on IDEAS

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    1. Datta Gupta, Nabanita & Smith, Nina, 2002. "Children and Career Interruptions: The Family Gap in Denmark," Economica, London School of Economics and Political Science, pages 609-629.
    2. Brownstone, David & Valletta, Robert G, 1996. "Modeling Earnings Measurement Error: A Multiple Imputation Approach," The Review of Economics and Statistics, MIT Press, pages 705-717.
    3. J. Ignacio García-Pérez & Yolanda F. Rebollo Sanz, 2009. "The use of permanent contracts across Spanish regions: Do regional wage subsidies work?," Investigaciones Economicas, Fundación SEPI, vol. 33(1), pages 97-130, January.
    4. 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, September.
    5. 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.
    6. Cristina Barceló & Ernesto Villanueva, 2010. "The response of household wealth to the risk of losing the job: evidence from differences in firing costs," Working Papers 1002, Banco de España;Working Papers Homepage.
    7. Blackburn, McKinley L & Bloom, David E & Neumark, David, 1993. "Fertility Timing, Wages, and Human Capital," Journal of Population Economics, Springer;European Society for Population Economics, pages 1-30.
    8. Mario García-Ferreira & Ernesto Villanueva, 2007. "Employment risk and household formation: evidence from differences in firing costs," Working Papers 0737, Banco de España;Working Papers Homepage.
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    Citations

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    Cited by:

    1. Tarja Viitanen, 2014. "The motherhood wage gap in the UK over the life cycle," Review of Economics of the Household, Springer, vol. 12(2), pages 259-276, June.
    2. Lia Pacelli & Silvia Pasqua & Claudia Villosio, 2013. "Labor Market Penalties for Mothers in Italy," Journal of Labor Research, Springer, vol. 34(4), pages 408-432, December.

    More about this item

    Keywords

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

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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