Parental labor market penalties during two years of COVID-19

We use a matched employer-employee dataset covering the universe of employees in the Italian private sector to compare labor market outcomes of mothers and fathers during the pandemic. We find that mothers experienced a larger penalty in terms of reduced labor market earnings compared to fathers (-14.1 vs. -6.9 %) in 2020 and the first half of 2021. In contrast, starting from July 2021, we observe similar trends in mothers' and fathers' earnings. Evidence highlighting differences in penalties according to the sector of activity (essential vs. non-essential and easiness of access to work from home), the type of contract, the age of children, and the pre-pandemic mother-father pay gap suggests that both demand and supply factors have played a role in explaining the gendered impact of COVID-19.