Family friendly firms? Worker mobility, firm attributes and wage trajectories of women and men

Author: Per Johansson, And V. Joseph Hotz, And Arizo Karimi, And
Dnr: 84/2015

Despite the convergence in labour force participation, educational level, and the choice of professions observed in the last few decades, significant gender wage gaps still persist in all industrialised countries. A large economics literature suggests that the earnings and wage growth of women are negatively affected by childbearing, and that male and female earnings diverge at the onset of parenthood. In trying to explain the source of the wage penalty to mothers, a recent literature explores the role of sorting across jobs in explaining the gender wage gap, where women are less likely to transition into high-paying jobs as compared to men. A related literature suggests that job amenities – in particular workplace flexibility – might explain the differences in the occupational career choices of men and women.

This paper considers the role played by firms and their attributes in accounting for the mobility of women and men around the onset of parenthood and for gender differences in wages. We index firms by their “family friendliness”, where this is a function of a large set of firm-level characteristics that seem to differentially attract men and women based on their parenthood status. We examine the effect of firm family friendliness on the gender gap between men and women and parents and non-parents, reflecting the view that wage differences due to family friendliness is a compensating differential.