When Paid Work Gives in to Unpaid Care Work: Evidence from the Hedge Fund Industry under COVID-19

We examine how childcare inequalities in the home affect the work productivity of female talent, using unique data on the family structures of hedge fund managers and the exogenous shock from school closures during the early COVID-19 pandemic response. We find that female managers’ ability to generate abnormal returns is curbed by 9% on average in the shock-month of school closures, providing a direct measure of the cost of unpaid care work. This effect is driven by mothers and especially mothers with young children. With increasing calls for more female representation in all layers of the economy and the efforts exerted toward that goal, there is reason for concern that these efforts might not factor in as the pandemic has uncovered how women in general and mothers in particular bear both the burden of unpaid care work and the subsequent cost to their paid work. This paper was accepted by Victoria Ivashina, finance.