USC Marshall

New parenthood causes large decreases in labor market incomes for mothers but not fathers, a stylized fact known as the “child penalty.” We combine a simple household model with estimates of child penalties in heterosexual non-adopting, heterosexual adopting, and same-sex couples to better understand what causes the child penalty in heterosexual nonadopting couples. Our results largely rule out giving birth and the father’s advantage in the labor market as mechanisms, leaving preferences, gender norms, and discrimination as the main explanations. In addition, our paper provides novel evidence on the impact of children on labor market outcomes of adopting and same-sex couples.

We estimate production functions for cognition and health for children aged 1-12 in India, based on the Young Lives Survey. India has over 70 million children aged 0-5 who are at risk of developmental deficits. The inputs into the production functions
include parental background, prior child cognition and health, and child investments, which are taken as endogenous. Estimation is based on a nonlinear factor model, based on multiple measurements for both inputs and child outcomes. Our results
show an important effect of early health on child cognitive development, which then becomes persistent. Parental investments affect cognitive development at all ages, but more so for younger children. Investments also have an impact on health at early ages
only.

In this paper we use high quality data from two developing countries, Ethiopia and Peru, to estimate the production functions of human capital from age 1 to age 15. We characterize the nature of persistence and dynamic complementarities between two
components of human capital: health and cognition. We also explore the implications of different functional form assumptions for the production functions. We find that more able and higher income parents invest more, particularly at younger ages when investments
have the greatest impacts. These differences in investments by parental income lead to large gaps in inequality by age 8 that persist through age 15.

Quantile decomposition methods are used to study the determinants of the gender gap in self-employment earnings across the earnings distribution of four Sub-Saharan countries: the Republic of Congo, Ghana, Rwanda, and Tanzania. Techniques developed by Firpo, Fortin, and Lemieux (2007) are used to decompose the gap into a compositional effect (the part of the earnings gap that can be explained by observable factors) and a structural effect (the part of the gap that can be explained by returns to those factors, suggestive of discrimination) at various quantiles of the income distribution. While, in all countries and all points of the wage distribution, compositional effects help explain gender gaps in self-employment earnings, the majority of the wage gap is due to structural effects (with the exception of low income earners in the Republic of Congo). Still, the relative importance of specific compositional factors and the specific contribution of structural factors varies across countries and at different points of the income distribution within countries. There is some evidence of a glass-ceiling effect in the Republic of Congo and Tanzania but not in Ghana and Rwanda. These results suggest that discrimination is influenced by local conditions and that there is no single model of earnings gaps that can explain gender gaps in earning in sub-Saharan Africa.