Identification of Child Penalties

Abstract

A large literature estimates child penalties using event studies by gender, normalizing by predicted earnings absent children and reporting the gender gap. This paper studies the identification framework underlying this strategy. Within gender, I argue that parallel trends is violated by selection into the timing of parenthood: higher human capital individuals delay childbirth and have steeper earnings trajectories. Between genders, I articulate the normalized design's identification assumptions, which I term normalized triple differences (NTD). Under NTD, I show that the conventional target, the gender gap in normalized effects, is not identified when parallel trends is violated. In contrast, a new causal estimand, the effect of parenthood on the gender earnings ratio, is point identified. Using Israeli administrative data, I find that parenthood's share of gender inequality is heterogeneous by age at first childbirth. Finally, I show that differences in fertility-timing distributions complicate cross-country comparisons of aggregate child-penalty estimates.