(Not) Thinking about the Future: Inattention and Maternal Labor Supply

Ana Costa-Ramón, Ursina Schaede, Michaela Slotwinski and Anne Ardila Brenoe

No 11359, CESifo Working Paper Series from CESifo

Abstract: The “child penalty” significantly reduces women’s lifetime earnings and pension savings, but it remains unclear whether these gaps are the deliberate result of forward-looking decisions. This paper provides novel evidence on the role of information constraints in mothers’ labor supply decisions. We first document descriptively that mothers are largely inattentive to the long-term financial consequences of reduced hours. In a large-scale field experiment that combines rich survey and administrative data, we then provide mothers with objective, individualized information about the long-run costs of reduced labor supply. The treatment increases demand for financial information and future labor supply plans, in particular among women who underestimate the long-term costs. Leveraging linked employer administrative data one year post-intervention, we observe that mothers who underestimate the long-term costs increase their labor supply by 6 percent over the mean.

JEL-codes: J16 J22 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-exp and nep-lab
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Working Paper: (Not) thinking about the future: inattention and maternal labor supply (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11359

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