R&R, American Economic Journal: Applied Economics

Search frictions make worker turnover costly to firms. A three-month parental leave expansion in Sweden provides exogenous variation that we use to quantify firms’ adjustment costs upon worker absence and exit. The reform increased women’s leave duration and likelihood of separating from pre-birth employers. Firms with greater exposure to the reform hired additional workers and increased incumbent hours, incurring additional wage costs. These adjustment costs vary by firms’ availability of internal and external substitutes. Economy-wide analyses show that a higher reform exposure is correlated with fewer hires and lower starting wages of young women compared to men and older women.

We study how turnover and human capital dynamics shape the life-cycle gender pay gap when employers are forward-looking and able to set gender-specific wage rates. In our equilibrium wage-posting model with learning-by-doing and fertility events, the life-cycle gap can be attributed to worker productivity, job search, employers’ endogenous wage-setting, and job productivity. Estimating the model on NLSY79 data, we find that although the high school and college gaps are driven by different forces, employers' wage-setting accounts for one-third of the gender gap in both groups. Neglecting interactions between turnover and human capital dynamics biases down the estimated role of turnover substantially.

This paper develops an equilibrium search model to study the mechanisms underlying the life-cycle gender wage gap: human capital accumulation, preference for job amenities, and employers’ statistical discrimination in wage offers and hiring. In the model, men and women differ in turnover behaviors, parental leave lengths, and preference for amenities before and after having children. Capacity-constrained firms anticipate these gender differences when setting wages and making match decisions. Estimating the model on administrative employer-employee data from Finland, I find that a large proportion (44%) of the gender wage gap in early career is attributed to employers’ statistical discrimination based on fertility concerns, whereas gender differences in labor force attachment explain the majority of the gap (70%) in late career. Both hiring discrimination and preference for amenities draw women to low-productivity jobs in early career, and slow down their career progression in the long run. Counterfactual simulations show that shifting two parental leave months from women to men shrinks the wage gap by 13%. A gender quota at top jobs improves women’s representation in high-productivity positions, but firms undo this policy by exerting more wage discrimination. An equal pay policy closes the wage gap by 15% on average, but has unintended consequences as employers adjust on the hiring margin.


Education, Marriage, and Child Development (with Pierre-André Chiappori, Monica Costa Dias and Costas Meghir)

The Careers and Wages of Women: Commuting, Sorting and Skills (with Monica Costa Dias and Fabien Postel-Vinay)

Skills, Mismatch, and Labor Market Search (with Ciprian Domnisoru, Arnaud Maurel and Andrew Shephard)