Unpacking the Child Penalty Using Personnel Data: How Promotion Practices Widen the Gender Pay Gap

Yoko Okuyama (), Takeshi Murooka () and Shintaro Yamaguchi ()
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Yoko Okuyama: Uppsala University
Takeshi Murooka: Osaka University
Shintaro Yamaguchi: University of Tokyo

No 17673, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We estimate the child penalty using detailed personnel records that enable decomposition into distinct pay components. Our analysis reveals that the penalty is initially driven by reductions in time-based pay following childbirth. However, job-rank-based pay becomes increasingly significant over time, emerging as the dominant factor by the 15-year mark. These effects are interconnected: reduced working hours lead to lower performance evaluations, which subsequently limit promotion opportunities. Our theoretical model demonstrates that current promotion practices, which reward extended hours at entry-level positions, can generate production ineffciency. This finding suggests that addressing promotion practices could simultaneously reduce gender inequality and improve talent allocation, making a compelling business case for organizational reform.

Keywords: child penalty; promotion; management practice; personnel economics; internal labor markets; gender pay gap; career progression (search for similar items in EconPapers)
JEL-codes: J13 J16 J24 J31 M51 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2025-02
New Economics Papers: this item is included in nep-hrm and nep-lma
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