The motherhood wage and income traps

Emmanuel Thibault (), Francesca Barigozzi and Helmuth Cremer
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Emmanuel Thibault: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Francesca Barigozzi: University of Bologna, Department of Economics, Bologna, Italy

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Abstract: We present a simple dynamic model based on on-the-job human capital accumulation affecting the dynamic of wage rates and labor earnings. The model can generate and explain the different dynamics of women's earnings after childbirth documented in the empirical literature on child penalties. We show that the temporary negative shock in labor supply due to childbearing may create a wage trap and a permanent divergence of labor earnings between genders. Even when the wage trap is avoided, and working mothers are on a path toward a high-wage equilibrium, slow convergence can permanently reduce earnings. We use this model to study the impact of different policies on the gender wage gap and child penalties. We show that mandatory maternal leave exacerbates the shock which pleads against long leaves. Similarly, cash transfers to mothers aggravate gender wage differences via the income effect on labor supply. By contrast, temporary subsidies to mothers' wages (possibly in the form of income tax credits) are not only useful to exit the wage trap, but also to speed up recovery and reduce the child penalty when the shock in labor supply is small enough to avoid the wage trap. Other family policies, like childcare subsidies and in-kind provision of formal childcare, are potentially useful because they reduce the mothers' cost of labor supply, but they affect mothers' choices only indirectly.

Keywords: Child penalty; Mothers’ earnings dynamics; Wage and income traps; Multiple equilibria (search for similar items in EconPapers)
Date: 2024-11-06
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Published in Journal of Population Economics, 2024, 37 (4), pp.74. ⟨10.1007/s00148-024-01053-4⟩

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Related works:
Journal Article: The motherhood wage and income traps (2024)
Working Paper: The Motherhood Wage and Income Traps (2023)
Working Paper: The motherhood wage and income traps (2023)
Working Paper: The Motherhood Wage and Income Traps (2023)
Working Paper: The motherhood wage and income traps (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04923085

DOI: 10.1007/s00148-024-01053-4

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