How institutions and local contexts shape the child penalty: evidence from italy’s public and private sectors

This paper examines the labour market consequences of motherhood in Italy, and whether they differ between the public and private sectors. Using INPS administrative data, we track mothers’ labour market trajectories around the birth of their first child in an event-study framework with individual fixed effects. We find that motherhood penalties are substantial and persistent, and considerably larger in the private than in the public sector, primarily through a higher probability of exiting employment. We explore this gap along several dimensions: the role of permanent versus temporary contracts, the dynamics of private-sector exit following childbirth, and the effect of the more generous parental leave introduced in 2022. We further show that local economic conditions, childcare availability, and gender norms moderate the penalty mainly through the extensive margin — greater childcare availability, lower unemployment, and less traditional gender norms all reduce the probability of exiting employment, with comparatively modest effects on earnings among mothers who remain employed. These moderating effects are stronger in the private sector, while public-sector mothers are markedly less sensitive to local conditions.