The Earnings Gap Isn’t a Skill Gap: Labor Market Skills Don’t Explain the “Child Penalty”
Jessen, Kinne & Battisti: "Child penalties in labour market skills" European Economic Review, Volume 184 (2026)
The persistent divergence in labor market outcomes between mothers and fathers following childbirth, commonly referred to as the “child penalty,” is the primary driver of gender gaps in labor market outcomes in high-income countries. While previous research has extensively covered employment and earnings, a new study by Jonas Jessen (WZB), Lavinia Kinne (DIW Berlin, Project A02), and Michele Battisti (University of Glasgow) investigates whether this penalty extends to cognitive skills relevant to the labor market, such as numeracy, literacy, and problem-solving. Utilizing data from the Programme for the International Assessment of Adult Competencies (PIAAC) across 29 countries, the authors analyze how these competencies evolve around the transition to parenthood.
To be able to estimate the evolution of skills around parenthood in a dataset like PIAAC where individuals are not followed over time, the authors adapt a so-called pseudo-panel approach. To get a proxy for the unobserved, pre-childbirth outcomes of new parents, this method uses observationally similar, younger individuals that are (statistically speaking) expected to have children at some point. A critical methodological finding of the study is that using this method, the estimates of child penalties in cognitive skills are sensitive to the inclusion of predetermined characteristics, specifically education. Without this control variable, cross-sectional estimates may capture cohort differences rather than parenthood effects, as younger cohorts are often more highly educated than their predecessors.
The authors find that numeracy scores, which are powerful predictors of wages, decline by around 11 percent of a standard deviation for fathers and an additional, but only barely statistically distinguishable, 7 percent of a standard deviation for mothers. Importantly, the results suggest that changes in general cognitive skills explain at most 10% of the long-term child penalty in earnings. Furthermore, the study finds no evidence that parenthood leads to a deterioration in the match between a worker’s skills and their occupational requirements. While mothers report a significant decrease in the use of numeracy skills at work due to employment interruptions, this does not appear to translate into a corresponding skill depreciation when compared to fathers. Instead, the observed short-term drops in skill performance for both parents may be linked to biological and environmental stressors, such as sleep deprivation and increased stress, which are known to temporarily impair cognitive functioning.
These findings imply that the child penalty in employment and earnings is not driven by a substantial loss of general human capital. Consequently, general skill training when re-entering the labor market after parental leave is unlikely to significantly mitigate the post-childbirth gender gaps on the labor market. The authors suggest that policies focusing on childcare accessibility and incentives for a more gender-balanced division of parental leave may be more relevant in this context where gender norms still seem to play an important role.
Link: Child penalties in labour market skills
