Events

Professor Barbara Petrongolo
Full Professor of Economics
University of Oxford

We study how gender norms shape the allocation of work within households and in the labor market when employers cannot observe couples’ preferences over the division of childcare. We build a model in which imperfect information can generate inefficient pooling equilibria, with egalitarian couples adopting traditional divisions of labor despite their preferences. Gender-based policies can help break these equilibria by allowing couples to credibly signal their preferences to employers. We investigate this mechanism using parental leave reforms in Sweden and the UK. Following Sweden’s 1995 introduction of a paternal leave quota, couples in which fathers take leave (slightly) beyond the quota experience smaller gender earnings gaps than couples in which fathers take less than the quota. These effects are driven by a combination of higher maternal and lower paternal earnings. These patterns are consistent with a signalling mechanism rather than differences in actual labor market experience. Suggestive evidence from the UK’s shared parental leave reform supports this interpretation.