Abstract We present novel evidence on the motherhood penalty in female employment, investigating its evolution over time and the role of family policy in mitigating this negative effect. Using a dynamic framework, we analyze seven European countries from 2003 to 2020, taking into account the potential endogeneity of fertility decisions. We find that childbirth affects female employment with different intensities across countries. Such an effect strengthens over time and persists as children grow up in most countries. Higher spending on family policies is associated with higher employment rates among new mothers. Disentangling cash and in-kind transfers, we find that the cash benefits have a slightly negative effect, while in-kind support is positive. However, the mere distinction may be insufficient for designing effective family policies, as the impact of spending interacts with multiple social and institutional factors, including gender equality in caring activities and inclusive labor markets.
Mussida et al. (Thu,) studied this question.