Impacts of Policies, Peers and Parenthood on Labor Market Outcomes

Abstract: This thesis consists of five self-contained papers.Paper 1 This paper analyzes the causal effect of the timing of first birth on highly educated women's career outcomes. To address the endogeneity of birth timing to labor market outcomes, I instrument the former with the occurrence of pregnancy loss before first birth. The results from OLS estimation suggest that a one-year delay of motherhood is positively associated with income and wages. However, 2SLS estimation instead indicates that a one-year delay has a significantly negative effect on both income and wages. The negative effects might partly be explained by child spacing: motherhood delay induces women to have the second child more closely spaced (but not fewer or more children altogether), and consequently to have a potentially longer consequtive parental leave. The same findings hold true when I employ an individual-fixed effects estimator based on panel data and no instrument, from which the results suggest a larger slope decline in the wage profile for "late" mothers compared to "earlier" mothers.Paper 2 This paper analyzes the relevance of spacing births for women's subsequent earnings and wages. Spacing births in longer intervals may allow women to re-enter the labor market between childbearing events, thereby avoiding expanded work interruptions and, in turn, reduce the negative effects of subsequent children. Based on arguably exogenous variation in birth spacing induced by pregnancy loss between the first two live births, the evidence provided in this paper supports this hypothesis and suggest that delaying second birth by one year, on average, increases the probability of re-entering the labor market between births. Moreover, spacing births are found to increase both labor market participation and labor income over an extended horizon after second birth. Also long-run wages are positively affected, with a more pronounced effect for highly educated mothers.Paper 3 This paper studies gender differences in the extent to which social preferences affect workers' shirking decisions. Using exogenous variation in work absence induced by a randomized field experiment that increased treated workers' absence, we find that also non-treated workers increase their absence as a response. Furthermore, we find that male workers react more strongly to decreased monitoring. In addition, our results suggest significant heterogeneity in the degree of influence that male and female workers exert on each other: conditional on the potential exposure to same-sex co-workers, men are only affected by their male peers, and women are only affected by their female peers.Paper 4 We examine the temporal pattern of the causal effect of fertility on female labor income using panel data based on Swedish registers, and instrumenting family size with parents' preferences for a mixed-sex sibling composition. The effect of a third child over the life cycle is evaluated against the alternative of stopping at two children. Our findings indicate a sizeable income reduction in the immediate years after birth, followed by a catching-up effect in income. The short-lived reduction likely corresponds to formal parental leave. Gauging the magnitude of the effect, we find that income decreases by roughly 11 percent over a 10-year horizon after birth. No effects are found on long-run wage rates or on contracted hours of work.Paper 5 This paper re-examines the labor supply responses to changes in the Swedish parental leave system, recognizing that take-up of parental leave benefits might not fully reflect time off from work in a system where job protection exceeds paid leave. We study three reforms, of which the first expanded the entitlement to paid leave by three months, and the two other reforms introduced gender quotas in paid leave. We find that both mothers and fathers decreased their labor supply when entitlement to paid leave was increased. However, the additional benefits were spread out over a long horizon and thus seem to have been used by parents to increase job flexibility. In addition, we find no evidence suggesting that the introduced gender quotas in paid leave altered parents' labor supply.