Family, Firms and the Gender Wage Gap in France

This paper explores how two main channels explaining the gender wage gap, namely the heterogeneity of firm pay policies and sex-specific wage consequences of parenthood, interact. We explore the firm heterogeneity channel by applying the model proposed by Card, Cardoso, and Kline (2016). After controlling for individual and firm heterogeneity, we show that the sorting of women into lower-paying firms accounts for 11% of the average gender wage gap in the French private sector, whereas within-firm gender inequality does not contribute to the gap. Performing these decompositions all along workers’ life cycle, we find evidence that this sorting mechanism activates shortly after birth. These gender-specific and dynamic firm choices generate wage losses all along mothers’ careers, in addition to direct child wage penalties. After birth, mothers tend to favor firms with more flexible work hours and home proximity, which may be detrimental to their labor market opportunities, as, within these contexts, firms may gain relative monopsonic power.