(Not) Thinking about the Future: Inattention and Maternal Labor Supply

Abstract

The "child penalty'' significantly reduces women’s lifetime earnings and pension savings, but it remains unclear whether these gaps are the deliberate result of forward-looking decisions. This paper provides novel evidence on the role of cognitive constraints in mothers’ labor supply decisions. In a large-scale field experiment that combines rich survey and administrative data, we provide mothers with objective, individualized information about the long-run costs of reduced labor supply. The treatment increases demand for financial information and future labor supply plans, in particular among women who underestimated the long-term costs. Leveraging linked employer administrative data one year post-intervention, we observe that these mothers increase their actual labor supply by 6 percent over the mean. Joint with Ursina Schaede, Michaela Slotwinski, and Anne Brenøe.