Childhood Environment and Motherhood Penalties
We explore the impact of childhood environment on the earnings penalties that mothers face at the birth of their first child. We approach this problem in three steps using large administrative data from Denmark. We classify municipalities based on the motherhood penalties experienced by permanent residents. High-penalty places have fewer human capital development opportunities, lower labor supply of women in the previous generation. We use a movers’ design to distinguish the causal effect of childhood environment from sorting of families. Our findings indicate that women who spent a longer period of their childhood in a high-penalty area experience lower earnings after childbirth, even though they have similar earnings the years before the birth of their first child. Next, we find that policies that impact the childhood environment can influence motherhood penalties in the future; increases in childcare availability during childhood lower motherhood penalties decades later. We show suggestive evidence that this is driven by increased labor supply in the previous generation of women.