Impact of Occupational Flexibility on Labor Market Outcomes of Women Following Childbirth

Abstract

The purpose of this study is twofold: (1) determine how occupational flexibility of a couple influence the effects of childbirth on women’s labor market outcomes and (2) measure the parental gender gap and decompose the gap for high and low flexibility occupations. Using data from the Panel Study of Income Dynamics and occupational flexibility characteristics from the O*NET database, we utilize an event study specification to determine the impact of a first child on various labor market outcomes for women within high vs low flexibility occupations and women whose spouses are within high vs low flexibility occupations. Our findings indicate that occupational flexibility impacts labor market outcomes following childbirth. We find an increase in income for women within high flexibility occupations following their first childbirth. Their low flexibility counterparts face an initial income decline that represents 6.1% of the average income. This income decline persists beyond the observed time frame. Occupational flexibility also has positive impacts on employment at the extensive and intensive margin. In the long term, the difference in weeks worked and weekly hours adjustments between women in high and low flexibility occupations is 3.4 weeks and 3.6 hours, respectively. Husbands’ occupational flexibility also exerts a positive, although smaller, positive influence on income and employment at the extensive and intensive margin. Furthermore, we estimate a parental gender gap that is twice as large in low flexibility occupations compared to high flexibility occupations. For instance, the parental gender gap among 30 to 34 year olds is 20.1 percent in the low flexibility cohort but only 12.3 percent in the high flexibility cohort. We also observe the absence of a fatherhood premium among the high flexibility cohort. Given the correlation between occupational flexibility and the gender gap, workplace flexibility shows promise as a policy tool to address gender disparities in labor market outcomes.