Productivity Changes around Childbirth: Evidence from the Mutual Fund Industry

Abstract

Societal expectations that new mothers might not be as dedicated to their careers anymore contribute to a lasting child penalty on women's labor market outcomes. Using novel data on mutual fund managers' maternity leaves, we document that women's productivity temporarily decreases around childbirth. Compared to their peers, funds of managers entering motherhood underpeform by 2.3% to 2.8% p.a. Our evidence suggests that childbirth-related distractions prevent female managers from devoting full attention to their work during this period. They reduce the number of corporate site visits and manage their portfolios less actively. Despite the transient nature of this productivity dip, which lasts until the initial six months after returning from maternity leave, children impose persistent penalties on women's careers in the mutual fund industry. We document a persistent decline in the participation rate of female managers after childbirth, and conditional on staying in the fund industry, new mothers face lower promotion prospects.

Keywords: Mutual fund performance, child penalty, women's careers

JEL Classification: J13, J16, G11, G23