Child Penalty Estimation and Mothers' Age at First Birth

with Lukas Riedel

YEP Doctoral Paper Award, 2024

Abstract: Motherhood continues to pose significant challenges to women’s careers, and a correct assessment of its effects is crucial for understanding the persistent gender inequality in the labor market. We show that the prevalent approach to estimate post-birth earnings losses – the so called “child penalties” – is prone to yield substantially biased results. We demonstrate that the biases stem from conventional event studies pooling together first-time mothers of all ages without considering their distinct characteristics and the varying impact of motherhood. To address the biases, we propose a novel approach that accounts for the heterogeneity by building upon recent advancements in the econometric literature on difference-in-differences models. Applying it to administrative data from Germany, we demonstrate that considering heterogeneity by maternal age at birth is crucial for both methodological correctness and a deeper understanding of gender inequality. We document that our approach yields substantially larger estimates of earnings losses after childbirth (by 20% in relative terms), indicating that the costs of motherhood and related gender gaps in Germany are even larger than previously thought. Moreover, we demonstrate that effects and their interpretation differ significantly depending on maternal age at birth. We show that younger first-time mothers experience larger career costs of motherhood as they miss out on the phase of the most rapid career progression.

A Novel Approach to Studying Percentage Quota Effects:  Application to Gender Quotas in Corporate Boards

with Olga Kuzmina

Runner-Up Paper Award, 8th EFiC Conference in Banking and Corporate Finance, 2024 

Abstract: Quotas have become a widespread policy tool to promote diversity in politics, education, and the corporate world. We develop a novel approach to evaluate the causal effects of universal percentage-based quotas. We exploit discontinuities in the actual share of an underrepresented group that arise solely due to rounding, whenever percentage-based regulations apply to a small team. We illustrate this approach by revisiting the question of how gender quotas in corporate boards affect firm performance. Contrary to previous studies that document negative effects, we find that quota-induced increases in the presence of women on boards have a positive impact on firms' outcomes. We explain these discrepancies by providing evidence of a downward bias in the common approach to studying gender quota effects, which uses the pre-quota share of women as treatment within DiD and IV models.

Unpacking the Small Effects of Subsidized Employment: the Role of Gender and Parenthood 

with Sarah Gharbi and Eloïse Menestrier

We evaluate a subsidized employment policy for disadvantaged youth in France, which was implemented to assist young workers struggling with the transition from school to work, experiencing unemployment, and residing in deprived areas. Starting with the investigation of average effects, we observe that the effect on the employment probability — the primary objective of this policy — is close to zero and only marginally significant. In contrast, when considering gender heterogeneity, our analysis indicates significant and positive effects on all outcomes for men. However, for women, the program fails to enhance the likelihood of employment. We identify two reasons for such discrepancies in programs effects for men and women. First, women are more likely to have children during the program, which causes them to drop out and experience no benefits from participation. Additionally, we observe gender-based sorting into different job types at the start of subsidized employment, with men typically securing cognitive tasks in public administration or industry, while women tend to occupy routine non-cognitive roles in healthcare and childcare. Our results have strong policy implications for both future policy evaluations and policy designs. 

Employment Transitions: Mechanisms for Gender Earnings Gap

with Suzanne Bellue

We document a significant gender gap in job-to-job mobility: full-time employed women are 10% less likely to do a job-to-job transition than men in a given year. We document that this gap emerges primarily after first childbirth, with women not changing employers during a maternity leave and decreasing their mobility after returning to the labor market. We study potential explanations for the latter and observe that mothers, even those who return to full-time work after childbirth, substantially reduce their commuting distance. This might serve as an explanation for the job-to-job mobility gap through the reduction of geographical radius of search and of the pool of vacancies and offers for mothers.  Since full-time job-to-job transitions serve as a way to climb a career ladder and outside offers affect within-firm barganing power, this gender mobility gap most likely contributes to the child penalty and glass ceiling phenomena. 

Effects of On-the-Job Training for Older and Low-Qualified Workers

with Jörg Heining and Sebastian Siegloch 

On-the-job training and upskilling have become a widespread tool to extend working life duration, overcome shortages of skilled workers, and to adapt to sectoral or industrial changes and the development of new technologies. However, there is very little evidence on the effectiveness of such programs due to the endogeneity of training decisions. We exploit the unique setting in Germany, in which age and firm size serve as eligibility criteria for subsidized vocational training targeted at older and low-qualified workers. Discontinuities around the eligibility cut-offs allow us to investigate causal effects of getting additional on-the-job training by workers at risk of unemployment. We aim to provide an informed policy advice regarding the effectiveness of such programs as a tool for adjustments to changes in labor markets and preventing unemployment.