Fertility-Based Discrimination
Abstract
We study employer discrimination based on expectations about women’s future fertility. The identification challenge is that expectations about fertility cannot be varied independently of the characteristics from which employers infer them. We show that discrimination can be identified from variation in employers’ cost of future fertility, without requiring variation in fertility expectations. We exploit the Pregnancy Discrimination Act of 1978, which first provided federal employment protection to pregnant workers, raising firms’ expected costs of employing women more likely to become pregnant. Using a difference-in-differences design comparing newly affected states with states that already had comparable protections, we find that the PDA reduced employment among women of childbearing age by 6.6%, primarily through lower hiring. The decline is concentrated among women with higher predicted future fertility, while employment of men and older women is largely unaffected. Our estimates imply that expected-fertility discrimination accounts for at least 27% of the observed gender employment gap.