Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314570 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17673
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
child penalty
promotion
management practice
personnel economics
internal labor markets
gender pay gap
career progression
JEL: 
J13
J16
J24
J31
M51
Document Type: 
Working Paper

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