Worker-firm matching and the parenthood pay gap: Evidence from linked employer-employee data

The parenthood pay gap is not fully explained by human capital depreciation and unobserved heterogeneity. Endogenous worker-firm matching could also account for such wage differences. This hypothesis is tested thanks to linked employer-employee data on the French private sector between 1995 and 2011. Childbirth penalties are estimated for women and for men from hourly wage equations including firm- and worker-fixed effects on top of usual measures of human capital. Though worker-firm matching explains none of the motherhood wage penalty, it plays a role in the case of fathers who do not experience any wage loss after childbirth, but do not enjoy any premium either; there is evidence of an erosion of this premium since the end of the 1990s. In a counterfactual where women do not incur any penalty after childbirth, the gender gap still amounts to 2/3 of the one that currently prevails.