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The Parenthood Gap: Firms and Earnings Inequality After Kids

Institute Working Paper 110 | Published January 15, 2025

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Authors

Rebecca Jack University of Nebraska-Lincoln
Daniel Tannenbaum University of Nebraska-Lincoln
Brenden Timpe Visiting Scholar, Institute
The Parenthood Gap: Firms and Earnings Inequality After Kids

Abstract

We document the dynamics of career paths around parenthood, capturing worker advancement within firms and across firms of differing pay. Using a new linkage between administrative data on U.S. workers’ fertility and labor-market histories, we show that the parental earnings gap is partly explained by mothers transitioning to lower-paying firms. Firm downgrading is driven by parents who take an extended absence from the labor force. Mothers who move to lower-paying firms see improved job amenities, but less generous fringe benefits. The firm’s contribution to the parental earnings gap rises over time and reaches one-third by the child’s 11th birthday.