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We study several key aspects of the design of parental leave systems. First, we estimate parents’ willingness to pay for parental leave using Danish administrative data on the division of leave from almost 190,000 births combined with sharp variation in economic incentives created by the parental leave benefit system. We find evidence of both strong behavioral responses with significant bunching at kink points and a willingness to pay for a gender-traditional allocation of leave, where fathers take little or no leave. Second, we provide a menu of counterfactual policy simulations showing substantial interaction effects between earmarked leave, replacement rates and the duration of leave benefits. Relevant for the implementation of a recent EU directive, a higher replacement rate significantly increases the behavioral response of fathers to earmarked leave. Finally, we discuss the welfare effects of different policies aimed at increasing the parental leave of fathers.

We study several key aspects of the design of parental leave systems. First, we estimate parents’ willingness to pay for parental leave using Danish administrative data on the division of leave from almost 190,000 births combined with sharp variation in economic incentives created by the parental leave benefit system. We find evidence of both strong behavioral responses with significant bunching at kink points and a willingness to pay for a gender-traditional allocation of leave, where fathers take little or no leave. Second, we provide a menu of counterfactual policy simulations showing substantial interaction effects between earmarked leave, replacement rates and the duration of leave benefits. Relevant for the implementation of a recent EU directive, a higher replacement rate significantly increases the behavioral response of fathers to earmarked leave. Finally, we discuss the welfare effects of different policies aimed at increasing the parental leave of fathers.

In recent years, there has been increasing political interest in the retirement age as the oldest generation takes up a larger share of the population due to rising life expectancy. It has become common in Western countries to increase the retirement age, which leads to growing inequality for people with the lowest life expectancy. In 2020, Denmark introduced a new policy aimed at reducing this inequality by lowering the early retirement age for those who have been in the workforce the longest. We aim to examine the effects on labor supply and substitution from a similar early retirement scheme when introducing a new scheme. We do this by using Danish administrative register data, owned and maintained by the Danish Agency of Labour Market and Recruitment, and applying a regression discontinuity design and a difference-in-differences approach. By exploiting a reduction in the early retirement age, we find negative labor supply effects and negative substitution effects from the introduction of the new scheme. Furthermore, we find that as people approach the normal retirement age, enrollment in the scheme increases, leading to greater negative substitution effects while the negative labor supply effects decrease.

In recent years, there has been increasing political interest in the retirement age as the oldest generation takes up a larger share of the population due to rising life expectancy. It has become common in Western countries to increase the retirement age, which leads to growing inequality for people with the lowest life expectancy. In 2020, Denmark introduced a new policy aimed at reducing this inequality by lowering the early retirement age for those who have been in the workforce the longest. We aim to examine the effects on labor supply and substitution from a similar early retirement scheme when introducing a new scheme. We do this by using Danish administrative register data, owned and maintained by the Danish Agency of Labour Market and Recruitment, and applying a regression discontinuity design and a difference-in-differences approach. By exploiting a reduction in the early retirement age, we find negative labor supply effects and negative substitution effects from the introduction of the new scheme. Furthermore, we find that as people approach the normal retirement age, enrollment in the scheme increases, leading to greater negative substitution effects while the negative labor supply effects decrease.

We revisit the identification of behavioral responses to tax reforms and develop a new approach for graphical validation and representation of treatment effects. We show that the standard estimation strategy relies on an assumption of constant trend differentials. In the context of income taxation, this implies that differences in income trends across the income distribution should remain constant in the absence of tax reforms. Similar to pre-trend validation of differences-in-differences studies, we can validate this assumption by comparing the evolution of income in untreated parts of the income distribution. We illustrate our new approach by studying several tax reforms in Denmark. (JEL: C14 H30 J22).

We revisit the identification of behavioral responses to tax reforms and develop a new approach for graphical validation and representation of treatment effects. We show that the standard estimation strategy relies on an assumption of constant trend differentials. In the context of income taxation, this implies that differences in income trends across the income distribution should remain constant in the absence of tax reforms. Similar to pre-trend validation of differences-in-differences studies, we can validate this assumption by comparing the evolution of income in untreated parts of the income distribution. We illustrate our new approach by studying several tax reforms in Denmark. (JEL: C14 H30 J22).

Place-based policies have gained increasing interest the recent years. An often used place-based policy is relocation of government sector employment. This study estimates the local labor market effects of changes in government sector employment. To estimate the local labor market effects, I use a difference-in-difference two-way fixed effects approach with a direct projections specification to allow for areas with multiple treatments. I apply my empirical approach to a balanced panel data set spanning over ten years from 2010 to 2019, with observations of 2145 parishes in Denmark each year. The panel data set is created by combining several registers containing Danish administrative data on working places, geographical data, financial statement data, and educational data. I argue that by using the finest possible spatial scale, the parishes, I get around potential selection biases from non-random placement of place-based policies. I find a positive short-run job multiplier of around 1, meaning that a change in government sector employment of 1 changes the private sector employment with 1 in the same direction. However, the job multiplier decreases over time and is only 0.35, and not significantly different from zero, after three years. I further find that an increase of the government sector share of the total employment by one percentage point will increase the private sector wages by around 0.15 percent in the short run. However, changes in government sector employment do not seem to impact the local housing costs. The job multiplier effect is very local, as the neighboring parishes within the same municipality are not affected by a change in government sector employment. The employment effect is primarily due to changes in the non-tradable sector, while the tradable sector seems unaffected. However, the job multiplier appears to be non-linear as only negative changes in government sector employment seem to affect the private sector employment.

Place-based policies have gained increasing interest the recent years. An often used place-based policy is relocation of government sector employment. This study estimates the local labor market effects of changes in government sector employment. To estimate the local labor market effects, I use a difference-in-difference two-way fixed effects approach with a direct projections specification to allow for areas with multiple treatments. I apply my empirical approach to a balanced panel data set spanning over ten years from 2010 to 2019, with observations of 2145 parishes in Denmark each year. The panel data set is created by combining several registers containing Danish administrative data on working places, geographical data, financial statement data, and educational data. I argue that by using the finest possible spatial scale, the parishes, I get around potential selection biases from non-random placement of place-based policies. I find a positive short-run job multiplier of around 1, meaning that a change in government sector employment of 1 changes the private sector employment with 1 in the same direction. However, the job multiplier decreases over time and is only 0.35, and not significantly different from zero, after three years. I further find that an increase of the government sector share of the total employment by one percentage point will increase the private sector wages by around 0.15 percent in the short run. However, changes in government sector employment do not seem to impact the local housing costs. The job multiplier effect is very local, as the neighboring parishes within the same municipality are not affected by a change in government sector employment. The employment effect is primarily due to changes in the non-tradable sector, while the tradable sector seems unaffected. However, the job multiplier appears to be non-linear as only negative changes in government sector employment seem to affect the private sector employment.

Past research has demonstrated mixed results evaluating long-run impacts on both cognitive and non-cognitive outcomes of subsidized early child care interventions. In this thesis, we evaluate the long-run cognitive effects of the Quebec Child Care Program (QCCP), introduced in 1997. We do so, by using data from OECD’s Programme for International Student Assessment (PISA), which allows us to explore the effects on math, reading and science scores for 15 to 16-year-old students exposed to the QCCP. We evaluate the overall effects of the QCCP and the underlying heterogeneous effects using a difference in difference (DiD) approach, where Quebec is the treated group and Ontario is the control group. We find no evidence that the QCCP has affected 15-16 years olds' cognitive outcomes homogeneously. We find weak but robust evidence of a positive effect on math scores for immigrants compared to ethnic Canadians when investigating heterogeneous effects.

Past research has demonstrated mixed results evaluating long-run impacts on both cognitive and non-cognitive outcomes of subsidized early child care interventions. In this thesis, we evaluate the long-run cognitive effects of the Quebec Child Care Program (QCCP), introduced in 1997. We do so, by using data from OECD’s Programme for International Student Assessment (PISA), which allows us to explore the effects on math, reading and science scores for 15 to 16-year-old students exposed to the QCCP. We evaluate the overall effects of the QCCP and the underlying heterogeneous effects using a difference in difference (DiD) approach, where Quebec is the treated group and Ontario is the control group. We find no evidence that the QCCP has affected 15-16 years olds' cognitive outcomes homogeneously. We find weak but robust evidence of a positive effect on math scores for immigrants compared to ethnic Canadians when investigating heterogeneous effects.

This paper investigates whether the impact of children on the labor market outcomes of women relative to men—child penalties—can be explained by the biological links between mother and child. We estimate child penalties in biological and adoptive families using event studies around the arrival of children and almost 40 years of adoption data from Denmark. Short-run child penalties are slightly larger for biological mothers than for adoptive mothers, but their long-run child enalties are virtually identical and precisely estimated. This suggests that biology is not a key driver of child-related gender gaps.

This paper investigates whether the impact of children on the labor market outcomes of women relative to men—child penalties—can be explained by the biological links between mother and child. We estimate child penalties in biological and adoptive families using event studies around the arrival of children and almost 40 years of adoption data from Denmark. Short-run child penalties are slightly larger for biological mothers than for adoptive mothers, but their long-run child enalties are virtually identical and precisely estimated. This suggests that biology is not a key driver of child-related gender gaps.

This thesis aims to explore the impact of the Covid-19 lockdown on gender gaps in work in the United States, using a feminist perspective to examine both paid and unpaid work. I apply data from American Time Use Surveys to an event-study approach and investigate how the lockdown affected parents of school-age children. The study will seek to determine whether the lockdown led to a setback in gender equality in labor market outcomes and whether some households were more vulnerable to gender inequality than others due to increased specialization. Finally, I analyze the impact of lockdown measures on the load of housework and childcare parents face and identify potential policy interventions that could support caregivers and reduce the burden of unpaid care work. During the analysis, I found an increased demand for childcare for working parents, which the parents share equally. However, I find an increased gender gap in paid work since mothers have decreased their intensive labor margin significantly more than fathers. Thus, working mothers have continued to carry a heavier load of childcare during the pandemic leading to decreased working hours in their paid employment. The thesis contributes to the research on gender inequality during Covid-19 by highlighting a positive correlation between gender gaps in unpaid care work and lockdown strictness. Furthermore, the research provides evidence of an unequal effect of the pandemic based on household characteristics. These findings demonstrate the importance of gender mainstreaming in policymaking., This thesis aims to explore the impact of the Covid-19 lockdown on gender gaps in work in the United States, using a feminist perspective to examine both paid and unpaid work. I apply data from American Time Use Surveys to an event-study approach and investigate how the lockdown affected parents of school-age children. The study will seek to determine whether the lockdown led to a setback in gender equality in labor market outcomes and whether some households were more vulnerable to gender inequality than others due to increased specialization. Finally, I analyze the impact of lockdown measures on the load of housework and childcare parents face and identify potential policy interventions that could support caregivers and reduce the burden of unpaid care work. During the analysis, I found an increased demand for childcare for working parents, which the parents share equally. However, I find an increased gender gap in paid work since mothers have decreased their intensive labor margin significantly more than fathers. Thus, working mothers have continued to carry a heavier load of childcare during the pandemic leading to decreased working hours in their paid employment. The thesis contributes to the research on gender inequality during Covid-19 by highlighting a positive correlation between gender gaps in unpaid care work and lockdown strictness. Furthermore, the research provides evidence of an unequal effect of the pandemic based on household characteristics. These findings demonstrate the importance of gender mainstreaming in policymaking.

This thesis aims to explore the impact of the Covid-19 lockdown on gender gaps in work in the United States, using a feminist perspective to examine both paid and unpaid work. I apply data from American Time Use Surveys to an event-study approach and investigate how the lockdown affected parents of school-age children. The study will seek to determine whether the lockdown led to a setback in gender equality in labor market outcomes and whether some households were more vulnerable to gender inequality than others due to increased specialization. Finally, I analyze the impact of lockdown measures on the load of housework and childcare parents face and identify potential policy interventions that could support caregivers and reduce the burden of unpaid care work. During the analysis, I found an increased demand for childcare for working parents, which the parents share equally. However, I find an increased gender gap in paid work since mothers have decreased their intensive labor margin significantly more than fathers. Thus, working mothers have continued to carry a heavier load of childcare during the pandemic leading to decreased working hours in their paid employment. The thesis contributes to the research on gender inequality during Covid-19 by highlighting a positive correlation between gender gaps in unpaid care work and lockdown strictness. Furthermore, the research provides evidence of an unequal effect of the pandemic based on household characteristics. These findings demonstrate the importance of gender mainstreaming in policymaking., This thesis aims to explore the impact of the Covid-19 lockdown on gender gaps in work in the United States, using a feminist perspective to examine both paid and unpaid work. I apply data from American Time Use Surveys to an event-study approach and investigate how the lockdown affected parents of school-age children. The study will seek to determine whether the lockdown led to a setback in gender equality in labor market outcomes and whether some households were more vulnerable to gender inequality than others due to increased specialization. Finally, I analyze the impact of lockdown measures on the load of housework and childcare parents face and identify potential policy interventions that could support caregivers and reduce the burden of unpaid care work. During the analysis, I found an increased demand for childcare for working parents, which the parents share equally. However, I find an increased gender gap in paid work since mothers have decreased their intensive labor margin significantly more than fathers. Thus, working mothers have continued to carry a heavier load of childcare during the pandemic leading to decreased working hours in their paid employment. The thesis contributes to the research on gender inequality during Covid-19 by highlighting a positive correlation between gender gaps in unpaid care work and lockdown strictness. Furthermore, the research provides evidence of an unequal effect of the pandemic based on household characteristics. These findings demonstrate the importance of gender mainstreaming in policymaking.

We revisit the identification of behavioral responses to tax reforms and develop anew approach that allows for graphical validation of identifying assumptions and rep-resentation of treatment effects. Considering typical tax reforms, such as a reductionin the top income tax, we show that the state-of-the-art estimation strategy relies onan assumption that trend differences in income across the income distribution remainconstant in the absence of reforms. Similar to the pre-trend validation of differences-in-differences studies, this identifying assumption of constant trend differentials canbe validated by comparing the evolution of income in untreated parts of the incomedistribution over time. We illustrate the importance of our new validation approachby studying a number of tax reforms in Denmark, and we show how violations ofthe identifying assumption may drive the estimates obtained from the state-of-the-artstrategy.

This paper investigates if the impact of children on the labor market trajectories of women relative to men — child penalties — can be explained by the biological links between mother and child. We estimate child penalties in biological and adoptive families using event studies around the arrival of children and almost forty years of adoption data from Denmark. Long-run child penalties in earnings and its underlying determinants are virtually identical in biological and adoptive families. This implies that biology is not important for child-related gender gaps. Based on additional analyses, we argue that our results speak against the importance of specialization based on comparative advantage more broadly.

Using Danish administrative data, I investigate the magnitude and nature of optimization frictions in the labor market of Danish students. Danish students face a unique institutional setting that makes it possible to distinguish between different types of frictions and estimate their effect on individual utility. I find that frictions significantly affect observed labor market outcomes. In particular, the empirical evidence points to inattention as the dominant type of friction. In contrast, my findings appear inconsistent with real adjustment costs, price misperception and gradual learning. Overall, optimization frictions reduce the utility of individuals by approximately 2-3 percent of disposable income.

Using Danish administrative data, I investigate the magnitude and nature of optimization frictions in the labor market of Danish students. Danish students face a unique institutional setting that makes it possible to distinguish between different types of frictions and estimate their effect on individual utility. I find that frictions significantly affect observed labor market outcomes. In particular, the empirical evidence points to inattention as the dominant type of friction. In contrast, my findings appear inconsistent with real adjustment costs, price misperception and gradual learning. Overall, optimization frictions reduce the utility of individuals by approximately 2-3 percent of disposable income.

Despite considerable gender convergence over time, substantial gender inequality persists in all countries. Using Danish administrative data from 1980-2013 and an event study approach, we show that most of the remaining gender inequality in earnings is due to children. The arrival of children creates a gender gap in earnings of around 20% in the long run, driven in roughly equal proportions by labor force participation, hours of work, and wage rates. Underlying these “child penalties”, we find clear dynamic impacts on occupation, promotion to manager, sector, and the family friendliness of the firm for women relative to men. Based on a dynamic decomposition framework, we show that the fraction of gender inequality caused by child penalties has increased dramatically over time, from about 40% in 1980 to about 80% in 2013. As a possible explanation for the persistence of child penalties, we show that they are transmitted through generations, from parents to daughters (but not sons), consistent with an influence of childhood environment in the formation of women’s preferences over family and career., Using Danish administrative data, we study the impacts of children on gender inequality in the labor market. The arrival of children creates a long-run gender gap in earnings of around 20 percent driven by hours worked, participation, and wage rates. We identify mechanisms driving these "child penalties" in terms of occupation, sector, and firm choices. We find that the fraction of gender inequality caused by child penalties has featured a dramatic increase over the last three to four decades. Finally, we show that child penalties are transmitted through generations, from parents to daughters, suggesting an influence of childhood environment on gender identity.

Using Danish administrative data, I investigate the magnitude and nature of optimization frictions in the labor market of Danish students. Danish students face a unique institutional setting that makes it possible to distinguish between different types of frictions and estimate their effect on individual utility. I find that frictions significantly affect observed labor market outcomes. In particular, the empirical evidence points to inattention as the dominant type of friction. In contrast, my findings appear inconsistent with real adjustment costs, price misperception and gradual learning. Overall, optimization frictions reduce the utility of individuals by approximately 2–3% of disposable income.

Using Danish administrative data, I investigate the magnitude and nature of optimization frictions in the labor market of Danish students. Danish students face a unique institutional setting that makes it possible to distinguish between different types of frictions and estimate their effect on individual utility. I find that frictions significantly affect observed labor market outcomes. In particular, the empirical evidence points to inattention as the dominant type of friction. In contrast, my findings appear inconsistent with real adjustment costs, price misperception and gradual learning. Overall, optimization frictions reduce the utility of individuals by approximately 2–3% of disposable income.

Despite considerable gender convergence over time, substantial gender inequality persists in all countries. Using Danish administrative data from 1980-2013 and an event study approach, we show that most of the remaining gender inequality in earnings is due to children. The arrival of children creates a gender gap in earnings of around 20% in the long run, driven in roughly equal proportions by labor force participation, hours of work, and wage rates. Underlying these “child penalties”, we find clear dynamic impacts on occupation, promotion to manager, sector, and the family friendliness of the firm for women relative to men. Based on a dynamic decomposition framework, we show that the fraction of gender inequality caused by child penalties has increased dramatically over time, from about 40% in 1980 to about 80% in 2013. As a possible explanation for the persistence of child penalties, we show that they are transmitted through generations, from parents to daughters (but not sons), consistent with an influence of childhood environment in the formation of women’s preferences over family and career., Using Danish administrative data, we study the impacts of children on gender inequality in the labor market. The arrival of children creates a long-run gender gap in earnings of around 20 percent driven by hours worked, participation, and wage rates. We identify mechanisms driving these "child penalties" in terms of occupation, sector, and firm choices. We find that the fraction of gender inequality caused by child penalties has featured a dramatic increase over the last three to four decades. Finally, we show that child penalties are transmitted through generations, from parents to daughters, suggesting an influence of childhood environment on gender identity.

This paper deals with the development of top incomes in Scandinavia. I first explain why academia over the past two decades has focused on the income share of top groups, in particular the one percent of the population with the highest incomes. Furthermore, I examine some of the main drivers of inequality that have been considered in the literature and present new suggestive evidence on the role of capital income and, in particular, the shift from interest income to dividends that has occurred over the past decades.

Despite considerable gender convergence over time, substantial gender inequality persists in all countries. Using Danish administrative data from 1980-2013 and an event study approach, we show that most of the remaining gender inequality in earnings is due to children. The arrival of children creates a gender gap in earnings of around 20% in the long run, driven in roughly equal proportions by labor force participation, hours of work, and wage rates. Underlying these “child penalties”, we find clear dynamic impacts on occupation, promotion to manager, sector, and the family friendliness of the firm for women relative to men. Based on a dynamic decomposition framework, we show that the fraction of gender inequality caused by child penalties has increased dramatically over time, from about 40% in 1980 to about 80%in 2013. As a possible explanation for the persistence of child penalties, we show that they are transmitted through generations, from parents to daughters (but not sons), consistent with an influence of childhood environment in the formation of women’s preferences over family and career

Despite considerable gender convergence over time, substantial gender inequality persists in all countries. Using Danish administrative data from 1980-2013 and an event study approach, we show that most of the remaining gender inequality in earnings is due to children. The arrival of children creates a gender gap in earnings of around 20% in the long run, driven in roughly equal proportions by labor force participation, hours of work, and wage rates. Underlying these “child penalties”, we find clear dynamic impacts on occupation, promotion to manager, sector, and the family friendliness of the firm for women relative to men. Based on a dynamic decomposition framework, we show that the fraction of gender inequality caused by child penalties has increased dramatically over time, from about 40% in 1980 to about 80% in 2013. As a possible explanation for the persistence of child penalties, we show that they are transmitted through generations, from parents to daughters (but not sons), consistent with an influence of childhood environment in the formation of women’s preferences over family and career.

This paper deals with the development of top incomes in Scandinavia. I first explain why academia over the past two decades has focused on the income share of top groups, in particular the one percent of the population with the highest incomes. Furthermore, I examine some of the main drivers of inequality that have been considered in the literature and present new suggestive evidence on the role of capital income and, in particular, the shift from interest income to dividends that has occurred over the past decades.

Despite considerable gender convergence over time, substantial gender inequality persists in all countries. Using Danish administrative data from 1980-2013 and an event study approach, we show that most of the remaining gender inequality in earnings is due to children. The arrival of children creates a gender gap in earnings of around 20% in the long run, driven in roughly equal proportions by labor force participation, hours of work, and wage rates. Underlying these “child penalties”, we find clear dynamic impacts on occupation, promotion to manager, sector, and the family friendliness of the firm for women relative to men. Based on a dynamic decomposition framework, we show that the fraction of gender inequality caused by child penalties has increased dramatically over time, from about 40% in 1980 to about 80%in 2013. As a possible explanation for the persistence of child penalties, we show that they are transmitted through generations, from parents to daughters (but not sons), consistent with an influence of childhood environment in the formation of women’s preferences over family and career

We use historical publications and micro data from the tax returns to construct internationally comparable estimates of the development in income inequality in Denmark over the last 140 years. The study shows that income inequality and top income shares have declined during several distinct phases in between periods of stability. Furthermore the quality of the Danish data allows us to analyse not only the development in top income shares but also broader inequality measures such as the Gini coefficient. These analyses show that top income shares are a good proxy for the underlying development in inequality.

We use historical publications and micro data from the tax returns to construct internationally comparable estimates of the development in income inequality in Denmark over the last 140 years. The study shows that income inequality and top income shares have declined during several distinct phases in between periods of stability. Furthermore the quality of the Danish data allows us to analyse not only the development in top income shares but also broader inequality measures such as the Gini coefficient. These analyses show that top income shares are a good proxy for the underlying development in inequality.

In this paper I investigate the nature of optimization frictions by studying the labor market of Danish students. This particular labor market is an interesting case study as it features a range of special institutional settings that affect students’ incentive to earn income and comparing outcomes across these setting effectively allow you to distinguish between different types of frictions. I find that the considered labor market is significantly affected by optimizations frictions, which masks the bunching at kink points normally associated with a positive labor supply elasticity under standard theory. More concretely I find the dominate optimization friction to be individuals’ inattention about their earnings during the year, while real adjustment cost and gradual learning appears to be of less importance.

In this paper I investigate the nature of optimization frictions by studying the labor market of Danish students. This particular labor market is an interesting case study as it features a range of special institutional settings that affect students’ incentive to earn income and comparing outcomes across these setting effectively allow you to distinguish between different types of frictions. I find that the considered labor market is significantly affected by optimizations frictions, which masks the bunching at kink points normally associated with a positive labor supply elasticity under standard theory. More concretely I find the dominate optimization friction to be individuals’ inattention about their earnings during the year, while real adjustment cost and gradual learning appears to be of less importance.

In this paper I investigate the nature of optimization frictions by studying the labor market of Danish students. This particular labor market is an interesting case study as it features a range of special institutional settings that affect students’ incentive to earn income and comparing outcomes across these setting effectively allow you to distinguish between different types of frictions. I find that the considered labor market is significantly affected by optimizations frictions, which masks the bunching at kink points normally associated with a positive labor supply elasticity under standard theory. More concretely I find the dominate optimization friction to be individuals’ inattention about their earnings during the year, while real adjustment cost and gradual learning appears to be of less importance.

In this paper I investigate the nature of optimization frictions by studying the labor market of Danish students. This particular labor market is an interesting case study as it features a range of special institutional settings that affect students’ incentive to earn income and comparing outcomes across these setting effectively allow you to distinguish between different types of frictions. I find that the considered labor market is significantly affected by optimizations frictions, which masks the bunching at kink points normally associated with a positive labor supply elasticity under standard theory. More concretely I find the dominate optimization friction to be individuals’ inattention about their earnings during the year, while real adjustment cost and gradual learning appears to be of less importance.

Until the 1970s income inequality was falling in a number of countries. Since then it has risen in in particular the USA, while it has fallen further in countries such as Denmark and Sweden.

Until the 1970s income inequality was falling in a number of countries. Since then it has risen in in particular the USA, while it has fallen further in countries such as Denmark and Sweden.

Until the 1970s income inequality was falling in a number of countries. Since then it has risen in in particular the USA, while it has fallen further in countries such as Denmark and Sweden.

Until the 1970s income inequality was falling in a number of countries. Since then it has risen in in particular the USA, while it has fallen further in countries such as Denmark and Sweden.

This paper investigates whether the impact of children on the labor market outcomes of women relative to men—child penalties—can be explained by the biological links between mother and child. We estimate child penalties in biological and adoptive families using event studies around the arrival of children and almost 40 years of adoption data from Denmark. Short-run child penalties are slightly larger for biological mothers than for adoptive mothers, but their long-run child penalties are virtually identical and precisely estimated. This suggests that biology is not a key driver of child-related gender gaps.