Parenthood, Family Friendly Firms, and the Gender Gaps in Work Careers∗

We consider the role that firm attributes play in accounting for the divergence in the careers of women and men, in terms of the wage and non-wage attributes of jobs, with the onset of parenthood. We exploit a matched employer-employee data set from Sweden that provides a rich set of firm and worker attributes. We index firms by their “family friendliness” and analyze the effect of firm family friendliness on the career gap between mothers and fathers. We find that women disproportionately sort into family friendly firms after first birth, and that the wage penalty to motherhood is counteracted by firm family friendliness. The smaller wage penalty, however, comes at the expense of occupational progression, due to that family friendly firms exhibit a lower-skilled workforce, lower wage dispersion, and less room for climbing the career ladder. Family friendly jobs are also shown to be more easily substitutable for one another, implying lower costs incurred on the employer by workers’ family responsibilities. Given the policy context in Sweden, our findings also suggest that paid parental leave with job protection may not be sufficient to facilitate the combination of a career and family responsibilities, but that also the nature of one’s job-tasks plays a crucial role.