Mothers’ Sorting into Lower-Paying Firms

Abstract

Examining firm-specific wage premiums’ contribution to child-penalties, we find mothers experience 39% income decline relative to fathers following childbirth, with 9% hourly wage penalty. Using French employer-employee data (1995-2021), we show firm premiums account for 10% of wage penalty, from mothers sorting into lower-paying firms rather than receiving lower premiums within firms. After childbirth, mothers sort into firms offering characteristics more conducive to reconciling family and professional lives: part-time work and proximity to home. These findings suggest that addressing the child-penalty requires policies enabling mothers to apply to or remain in high-paying firms, rather than focusing solely on within-firm disparities.