Reconciling Estimates of the Long-Term Earnings Effect of Fertility

Simon Bensnes, Ingrid Huitfeldt and Edwin Leuven

No 26043, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: This paper reconciles different approaches to estimating the labor market effects of children. Combining elements from event-study and instrumental-variable estimators we find that while both approaches imply a 15 percent increase in the mother-partner earnings gap ("child penalty"), they differ in what drives this gap. The standard event study attributes it primarily to reduced maternal earnings, but our results suggest maternal changes account for less than half. We show that women time fertility as their earnings profile flattens, causing the event study to overestimate the maternal penalty. This finding has broader implications for event-study designs, as pre-trends may be uninformative about selection bias.

Keywords: Child penalty; female labor supply; event study; instrumental variable (search for similar items in EconPapers)
JEL-codes: C36 J13 J16 J21 J22 J31 (search for similar items in EconPapers)
Date: 2026-02
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Persistent link: https://EconPapers.repec.org/RePEc:crm:wpaper:26043

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