gender-wage-gap-penalty

Family formation, child-rearing, and their implications for women's labor market decisions and outcomes have recently been studied as potential 'unexplained factors' contributing to the gender pay gap. Opposite to most of the literature available, I study the short-term impacts of motherhood, marriage, and labor market interruptions in Nicaragua, a country with high female labor force participation, shared maternity leave costs (firm and national social security), and a high informality. I provide evidence of unexplained wage differentials by gender and the increase of these differences due to motherhood and employment in the informal sector. I assess a potential mechanism, mothers preferring informal jobs due to the flexibility of working hours. I find that formal jobs represent an absorbing and prefer job status for mothers, even more than for men without children and fathers. Likewise, mothers show higher transition rates from unemployment and inactivity to informal job status (own-account and salaried). These results suggest that mothers are even keener to work, contrary to what an employer (prejudiced or statistically biased) may assume and that the selection into informal or "flexible jobs" is influenced by the lack of better jobs and not by voluntary entry.