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Unpacking the Child Penalty Using Personnel Data: How Promotion Practices Widen the Gender Pay Gap

Author

Listed:
  • Okuyama, Yoko

    (Uppsala University)

  • Murooka, Takeshi

    (Osaka University)

  • Yamaguchi, Shintaro

    (University of Tokyo)

Abstract

We estimate the child penalty using detailed personnel records that enable decomposition into distinct pay components. Our analysis reveals that the penalty is initially driven by reductions in time-based pay following childbirth. However, job-rank-based pay becomes increasingly significant over time, emerging as the dominant factor by the 15-year mark. These effects are interconnected: reduced working hours lead to lower performance evaluations, which subsequently limit promotion opportunities. Our theoretical model demonstrates that current promotion practices, which reward extended hours at entry-level positions, can generate production ineffciency. This finding suggests that addressing promotion practices could simultaneously reduce gender inequality and improve talent allocation, making a compelling business case for organizational reform.

Suggested Citation

  • Okuyama, Yoko & Murooka, Takeshi & Yamaguchi, Shintaro, 2025. "Unpacking the Child Penalty Using Personnel Data: How Promotion Practices Widen the Gender Pay Gap," IZA Discussion Papers 17673, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17673
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    More about this item

    Keywords

    child penalty; promotion; management practice; personnel economics; internal labor markets; gender pay gap; career progression;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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