Child Penalties and Financial Incentives: Exploiting Variation along the Wage Distribution

We relate women's labor earnings losses due to motherhood to their pre-childbirth rank in the distribution of hourly wages. Using French administrative data from 2005 to 2015, we show these "child penalties" to decrease steeply along the distribution; by contrast, related hourly wage losses are pretty homogeneous. Low-wage mothers opt out or decrease their working hours more frequently; the magnitude of such responses is completely monotone along the distribution. This empirical evidence highlights the relevance of financial incentives and suggests that child penalties arise from decisions based on the gains of specialization, rather than on gender differences in preferences or on gender norms.