What makes motherhood so expensive?: The role of social expectations, interdependence, and coordination failure in explaining lower wages of mothers

This paper utilizes expectations imposed by society to explain lower wages of mothers compared to non-mothers in the labor market. Social expectation, interdependence between mothers’ labor supply and childcare services, and lack of coordination between employers, employees (mothers), and childcare services explain how an economy can be caught in a ‘trap’ exhibiting large wage differences. Higher levels of human capital, increased coordination along with affordable childcare services in a more modern economy allows for specialization, increasing returns, and the possibility for a better outcome due to multiple equilibria.