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

Segregation of the labour market into a family-friendly and a non-family-friendly sector implies that women self-select into sectors depending on institutional constraints, preferences for family-friendly working conditions and expected wage differences. We take this sector dimension into account and find a severe penalty after birth-related leave in the non-family-friendly sector, so that women who would be affected by this penalty self-select into the family-friendly sector. The penalty is a combination of a large human-capital depreciation effect, a child penalty and no recovery