Child penalties in labour market skills

This paper estimates child penalties in labour-market-relevant cognitive skills, such as numeracy but also literacy and problem-solving competencies. We use international PIAAC data and adapt a pseudo-panel approach to a single cross-section covering 29 countries. Numeracy scores, which are associated with the largest returns to skills and pronounced gender differences, decline by 0.11 standard deviations for fathers and an additional 0.07 for mothers. We find no evidence of a deterioration in the occupational skill match for either mothers or fathers. Our findings suggest that changes in general labour market skills such as numeracy competencies explain at most 10% of child penalties in earnings. We additionally show that cross-sectional estimates of child penalties can be sensitive to controlling for predetermined characteristics that vary across cohorts, in our case education.