Abstract: Using panel data from the National Longitudinal Survey
of Youth (NLSY), we document that gender differences in wages
almost double during the first 20 years of labor market experience
and that there are substantial gender differences in employment
and hours of work during the life cycle. A large portion of gender
differences in labor market attachment can be traced to the impact
of children on the labor supply of women. We develop a
quantitative life-cycle model of fertility, labor supply, and
human capital accumulation decisions. We use this model to assess
the role of fertility on gender differences in labor supply and
wages over the life cycle. In our model, fertility lowers the
lifetime intensity of market activity, reducing the incentives for
human capital accumulation and wage growth over the life cycle of
females relative to males. We calibrate the model to panel data of
men and to fertility and child related labor market histories of
women. We find that fertility accounts for most of the gender
differences in labor supply and wages during the life cycle
documented in the NLSY data.
Keywords: Gender wage gap, employment, experience, fertility, human capital
JEL Classification: J2;J3