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We develop a model to study the impact on gender gaps in participation and wages of a liquidity constraint that prevents some households from paying child care. We show that this liquidity constraint generates an inefficiency and amplifies gender gaps in the labour market. In this framework, an extension of paid maternity leave duration has ambiguous effects on gender inequality. In contrast, child care subsidies, which require higher taxes, and loans, which do not, unambiguously reduce gender inequality. We illustrate the mechanisms at play in a numerical example using Spanish data.

We study the short- and long-run impact of motherhood on labour market outcomes and explore the individual and firm-level factors that influence it. Using matched employer-employee data for Italy over 1985-2018, through an event study methodology around childbirth, we show that the long-run child penalty in annual earnings is 57 log points and it largely depends on the change in labour supply along the intensive margin. The birth of a child increases the probability of transition to non-employment, reduces the likelihood of having executive roles and increases that of working in firms with lower productivity, sales, capital and wages, providing evidence of sorting into worse firms after childbirth. In the heterogeneity analysis, we find that the child penalty is higher for young, low-wage mothers and those taking longer leaves. It is larger in firms with less generous pay, worse peers, in more gender-conservative regions and where childcare services are scarcer.

In the recent research on top incomes, there has been little discussion of gender. How many of the top 1 and 10 per cent are women? A great deal is known about gender differentials in earnings, but how far does this carry over to the distribution of total incomes, bringing self-employment and capital income into the picture? We investigate the gender divide at the top of the income distribution using tax record data for a sample of eight countries with individual taxation. We show that women are under-represented at the top of the distribution. They account for between a fifth and a third of those in the top 10 per cent. Higher up the income distribution, the proportion is lower, with women constituting between 14 and 22 per cent of the top 1 per cent. The presence of women in the top income groups has generally increased over time, but the rise becomes smaller at the very top. As a result, the gradient with income has become more marked: the under-representation of women today increases more sharply. Examination of the shape of the income distribution by fitting a Pareto distribution shows that at the end of the period women disappear faster than men as one moves up the income scale in all countries. In this sense, there appears to be something of a "glass ceiling" for women. In the case of Canada, Denmark, Norway and New Zealand, there appears to have been a reversal over time, with the slope of the upper tail having been steeper for women in the past. In seeking to explain this, we highlight the role of income composition, where we show that there have been significant changes over time, underlining the fact that it is not sufficient to look only at earned income.