Thomas Fischer

We document a substantial glass ceiling in the Swedish labor market: women constitute less than 20% within the top 1% of the earnings distribution. Using a structural micro-founded model of a dual earner household with learning-on-the-job, we link this to the child penalty. While on parental leave, women accumulate less human capital on the job, get promoted to a lesser extent, and hence are less likely to be within the top shares of the earnings distribution. A counterfactual exercise in the quantitative model shows that equalizing parental leave enforces female labor supply and thereby reduces the glass ceiling substantially. On the other hand, it also increases earnings inequality within the group of women and has little impact on the gender gap towards retirement years.