Children and Gender Inequality: Evidence from Denmark Henrik Kleven, Camille Landais, and Jakob Egholt Søgaard NBER Working Paper No. 24219 January 2018 JEL No. J13, J16, J21, J22, J31 Abstract Despite considerable gender convergence over time, substantial gender inequality persists in all countries. Using Danish administrative data from 1980-2013 and an event study approach, we show that most of the remaining gender inequality in earnings is due to children. The arrival of children creates a gender gap in earnings of around 20% in the long run, driven in roughly equal proportions by labor force participation, hours of work, and wage rates. Underlying these “child penalties”, we find clear dynamic impacts on occupation, promotion to manager, sector, and the family friendliness of the firm for women relative to men. Based on a dynamic decomposition framework, we show that the fraction of gender inequality caused by child penalties has increased dramatically over time, from about 40% in 1980 to about 80% in 2013. As a possible explanation for the persistence of child penalties, we show that they are transmitted through generations, from parents to daughters (but not sons), consistent with an influence of childhood environment in the formation of women’s preferences over family and career. The paper contributes primarily to two literatures. First, it contributes to the enormous literature on gender inequality in the labor market. Second, it contributes to the literature on children and family labor supply. The analysis is also related to recent work on the importance of gender identity norms for labor market outcomes. Our findings suggest that female gender identity is formed during a girl's childhood based on the gender roles of her parents. The paper is organized as follows. Section 2 describes the institutional background and data, section 3 lays out the event study methodology, estimates the impacts of children and investigates identification, section 4 presents our dynamic decomposition of gender inequality, section 5 analyzes intergenerational transmission, and section 6 concludes.Children and Gender Inequality: Evidence from Denmark Henrik Kleven, Camille Landais, and Jakob Egholt Søgaard NBER Working Paper No. 24219 January 2018 JEL No. J13, J16, J21, J22, J31 Abstract Despite considerable gender convergence over time, substantial gender inequality persists in all countries. Using Danish administrative data from 1980-2013 and an event study approach, we show that most of the remaining gender inequality in earnings is due to children. The arrival of children creates a gender gap in earnings of around 20% in the long run, driven in roughly equal proportions by labor force participation, hours of work, and wage rates. Underlying these “child penalties”, we find clear dynamic impacts on occupation, promotion to manager, sector, and the family friendliness of the firm for women relative to men. Based on a dynamic decomposition framework, we show that the fraction of gender inequality caused by child penalties has increased dramatically over time, from about 40% in 1980 to about 80% in 2013. As a possible explanation for the persistence of child penalties, we show that they are transmitted through generations, from parents to daughters (but not sons), consistent with an influence of childhood environment in the formation of women’s preferences over family and career. The paper contributes primarily to two literatures. First, it contributes to the enormous literature on gender inequality in the labor market. Second, it contributes to the literature on children and family labor supply. The analysis is also related to recent work on the importance of gender identity norms for labor market outcomes. Our findings suggest that female gender identity is formed during a girl's childhood based on the gender roles of her parents. The paper is organized as follows. Section 2 describes the institutional background and data, section 3 lays out the event study methodology, estimates the impacts of children and investigates identification, section 4 presents our dynamic decomposition of gender inequality, section 5 analyzes intergenerational transmission, and section 6 concludes.