The smaller wage and income penalties to parents from working in family friendly firms and jobs come at the expense of their occupational progression, especially among mothers, impeding their ability to climb career ladders

Parenthood, Family Friendly Firms, and the Gender Gaps in Early Work Careers by V. Joseph Hotz, Per Johansson, Arizo Karimi.

NBER Working Paper No. 24173
Issued in December 2017
NBER Program(s):Children, Labor Studies

 

"We consider the role that firm attributes play in accounting for the divergence in the careers of women and men, with the onset of parenthood. We exploit a matched employer-employee data set from Sweden that provides a rich set of firm and worker attributes. We index firms by their “family friendliness” and analyze the effect of firm family friendliness on the career gap between mothers and fathers. We find that women disproportionately sort into family friendly firms after first birth and that the wage penalty to motherhood is diminished by being assigned to a more family friendly firm or job. We also find that working in a more family friendly firm or job diminishes the parenthood penalty to labor earnings and makes it easier for mothers to work more hours. At the same time, the smaller wage and income penalties to parents from working in family friendly firms and jobs come at the expense of their occupational progression, especially among mothers, impeding their ability to climb career ladders. Finally, we find that family friendly jobs are more easily substitutable for one another. This latter finding suggests that family friendly firms are able to accommodate the family responsibilities of their workers while still managing to keep their costs low. Our findings also suggest that paid parental leave with job protection – which are features of the Swedish context – may not be sufficient to achieve the balancing of career and family responsibilities, but that the way firms and jobs are structured can play a crucial role in facilitating this balance."