Does the Gap in Family-friendly Policies Drive the Family Gap?

A segregation of the labour market into a family-friendly and a non-family friendly sector has the effect that women self-select into the sectors depending on institutional constraints, preferences for family-friendly working conditions and expected wage differences. We find that neglecting the sector dimension tends to understate the effect of birth-related interruptions in both sectors. The combined effect of a large depreciation effect and no recovery means that females in the non-family friendly sector (e.g. private sector) are punished severely after childbirth. In the family friendly sector (e.g. public sector), we find complete catch up.