Structural Labor
Gender
This paper documents novel findings that Black women in the U.S. experience child penalties in ways that fundamentally differ from those faced by White women. The child penalty in employment is one-third as large for Black women (10%) compared to White women (30%). Educated, high-wage, married Black women return to the labor market almost immediately after childbirth. This racial difference in the labor-leisure trade-off is driven by subjective expectations: Black households face higher probabilities of layoff in the labor market, as well as higher probabilities of separation, divorce, and not remarrying. Using a structural life-cycle model, I show that high-ability Black women use labor market attachment for self-insurance while sacrificing their own leisure to maintain high levels of parenting time. This generates lower observed penalties in wages and labor force participation, but larger unobserved penalties through sacrificed leisure. Counterfactual simulations reveal that equalizing marriage probabilities and layoff shocks can close up to 75% of the racial gap in child penalties in employment. Welfare improves primarily through increased leisure for Black women. These results highlight the importance of uncertainty and dynamic household choices in explaining persistent racial gaps in female labor supply and child penalties.