Across America, the pandemic threw into sharp relief the challenges that parents—particularly mothers—face when balancing work with child rearing. But for professor Claudia Olivetti, that tension has been her life's work.
For more than two decades, Olivetti has studied labor economics, specifically when it comes to women in the workplace. She explores issues around wages, hours, careers, and intergenerational mobility. Olivetti's latest work, published as part of the National Bureau of Economic Research's working paper series and co-authored with her longtime collaborator, Nobel Prize laureate and Harvard professor Claudia Goldin, examines why the gender earnings gap widens after women become mothers—and why it persists even after the kids have grown up.
Several previous studies show that mothers' diminished earnings remain for at least a decade. Olivetti and Goldin analyze the impact of children as they become more independent and find that even when mothers increase their hours of paid work and assume greater career challenges, they remain largely unable to bridge the "parental gender gap."
"From a societal perspective, losing half of its potential workforce to the career-family tradeoff is a cost that society may not afford.," Olivetti says. "How do you mitigate the fact that these tradeoffs exist? It's important to study how we can give women a set of choices."
From the 'motherhood penalty' to the 'fatherhood premium'
Olivetti and Goldin's new paper builds on their 2017 research that found the gender earnings gap post-baby is fueled both by the shift of women to lower-paying firms and also by their lower career prospects within a firm. In other words, mothers move to jobs that offer more flexibility but pay less, and often miss out on promotions and other benefits, because they must or choose to spend time childrearing.
Her new findings suggest further causes for the widening pay gap: a "fatherhood" premium.
"If you compare fathers to non-fathers, there is a huge premium to having kids that is persistent, especially for college-educated men in very demanding jobs," Olivetti says.
This is likely due to the fact that men are generally seen as the financial supporters of the family, so companies bestow more awards and bonuses, raises, and promotions on fathers as a gesture of goodwill. Fathers tend to work longer hours, too, Olivetti notes. At the same time, women are often dinged for pursuing careers in traditionally male-dominated—and higher-paying—fields, such as medicine or corporate management.
Previous research shows that when women are in predominantly male professions, they are much more penalized than their male coworkers who make the same mistake, Olivetti says. "For example, if you think about managers, women are disproportionately let go or fired for poor performance. Surgeons receive fewer referrals. There seems to be more of a penalty for mistakes in these high-profile, typically 'male' jobs."
Olivetti stresses that the issue is complicated. It's not just about getting women into the labor force, but also keeping them there, which involves providing parental leave as well as access to quality childcare. However, simply throwing policies and money at the issue won't suffice.
"It is deeper than that," she explains. "For example, paid leave is a good thing, but too much paid leave can backfire. If your leave is up to three years and you take leave for all three years, when you come back, all those promotions are gone. Or, some employers might not want to hire young women even if they're very accomplished because they're afraid they will take the full three years of leave. Also, paid leave on its own is not going to do a lot for women in the workforce if it's only four months, six months. What do we do after that? Childcare is fundamental."
With access to childcare playing such a critical role in women's ability to work, Olivetti has also been examining the impact of the nation's first and only universal childcare program, which was enacted under the Lanham Act of 1940. To enable more women to participate in the World War II effort, the Lanham Act allocated $20 million to set up hundreds of nurseries across the country, enrolling more than half a million children.
In their most recent research paper on the topic, Olivetti, Goldin, and their research partners found the nursery programs were late to start, limited in scope, and incapable of greatly increasing women's employment overall. They are now interested in learning whether families—in particular, the children—benefited from this policy in the long run.
"It's very easy to compute the cost of childcare. What is harder to do is get an estimate of the overall benefits to a child," Olivetti says. "For middle to lower income families, having two working parents really makes a difference. Quality childcare then really is complementary to the additional income. It has been shown to have a positive impact on the outcomes of children."
Discovering economics
Born and raised in Italy, Olivetti started out studying theoretical statistics as a math major in college. During her time as an undergraduate she attended a talk by American scholar Herbert Simon, who coined the term "bounded rationality" to describe how human beings make decisions. "It was the intersection of econ and psychology. I really fell in love with that," Olivetti says.
She quickly switched her major to economics and ended up pursuing a PhD in the field at the University of Pennsylvania.
"I started to think about economic actors and the impact of decisions that, at first, you wouldn't think of as being fundamentally economic—what type of major you select, marrying, fertility," she says.
When she began working on her thesis in the late 1990s, the most notable change to the U.S. labor market had been the massive influx of women. Olivetti noted that this increased participation in the economy was driven most by mothers.
"Between the end of the 60s and the mid-90s, the participation rate of women with young children increased from less than 20 percent to 60 percent," she says. "All of a sudden, children were much less of a determinant of where a woman worked. It was a really major change. So I started thinking about what the consequences of this behavior would be, and how that was going to change both the economy and society in general."
Once Olivetti became a mother herself, she gained a new level of understanding of the complex tradeoffs faced by working mothers.
"In many ways, the playground became like a lab for me, offering rich, real-world examples of the struggles and strengths unique to motherhood," she says. "I've seen how certain dynamics, like gender norms and expectations—for example, who teachers call for emergencies—can subtly or overtly affect career progression. I've also experienced shifts in my own priorities, including how I value time with my child."
An influential collaboration
Olivetti recalls first learning of Claudia Goldin through Goldin's groundbreaking work. "Her insights on wage determination, employment, and discrimination in Understanding the Gender Gap: An Economic History of American Women really shaped how I thought about my own research," Olivetti says. The book remains the seminal work on the reasons behind the gender pay gap.
In the early 2000s, Goldin was working on assembling a cluster of visiting scholars at the Radcliffe Institute for Advanced Study. "I had read Claudia's PhD dissertation and was very impressed," Goldin recalls.
She invited Olivetti to join her Radcliffe research group, and the two have been frequent collaborators—and close friends—ever since.
"We think together, yet we have different strengths," Goldin says. "She is more mathematical, and I am more conceptual. But we, remarkably, are always speaking the same language and can anticipate what the other is trying to articulate. It really is magical."
"She totally changed my professional outlook," Olivetti says. "Claudia taught me that I could be myself and still succeed, that my best work was yet to come, and how to handle tricky collaborations."
The two also share many personal passions, from enjoying the arts and crafting to reading the same books and being proud dog owners.
In 2022, Goldin even joined Olivetti in her Dartmouth affiliation when she was awarded an honorary doctorate of humane letters from the university.
"We also work on separate projects which we often discuss," Goldin adds. "We help each other with these separate projects and we also work together."
In 2020, Olivetti teamed up with Goldin and Seema Jayachandran, a professor of economics at Princeton, to launch a Gender in the Economy Group within NBER. The group solicits research specifically on the economies of childcare, workplace equity, domestic violence, and other related topics, and highlights it at its annual conference. It also awards grants to fund further studies.
"We want to understand women's role and gender inequalities as economies develop," Olivetti has said, noting the group has sponsored research by academics from lower- and middle-income nations in the underrepresented Global South.
The field of gender economics continues to ignite important research because, as Goldin puts it: "No matter how much progress has been made, there are still important, meaningful differences."
