DP11586 The Career Costs of Children

Author(s): Jerome Adda, Christian Dustmann, Katrien Stevens
Publication Date: October 2016
Keyword(s): dynamic structural model, Fertility, gender wage gap, Labor Supply, occupation
JEL(s): C15, C33, J13, J22, J24, J31
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11586

We estimate a dynamic life-cycle model of labor supply, fertility and savings, incorporating occupational choices, with specific wage paths and skill atrophy that vary over the career. This allows us to understand the trade-o between occupational choice and desired fertility, as well as the sorting both into the labor market and across occupations. We quantify the life-cycle career costs associated with children, how they decompose into loss of skills during interruptions, lost earnings opportunities and selection into more child-friendly occupations. We analyze the long-run effects of policies that encourage fertility and show that they are considerably smaller than short-run effects.