Women’s career choices, social norms and child care policies

Our model explains the observed gender-specific patterns of career and child-care choices through endogenous social norms. We study how these norms contribute to the emergence of a gender wage gap. We show that via the social norm a couple’s child-care and career choices impose an externality on other couples, so that the laissez-faire is inefficient. We use our model to study the design and effectiveness of three commonly used policies.We find that child-care subsidies and women quotas can be effective tools to mitigate or eliminate the externality. Parental leave, however, may even intensify the externality and decrease welfare.