Labour economics – DECISION STATS

A new paper quantitatively analyzes the impact of child bearing on women. Summary-

Women [who score in the upper third on a standardized test] have a net 8 percent reduction in pay during the first five years after giving birth

From http://papers.nber.org/papers/w16582

Having a child lowers a woman’s lifetime earnings, but how much depends upon her skill level. In The Mommy Track Divides: The Impact of Childbearing on Wages of Women of Differing Skill Levels (NBER Working Paper No. 16582), co-authors Elizabeth Ty Wilde, Lily Batchelder, and David Ellwood estimate that having a child costs the average high skilled woman $230,000 in lost lifetime wages relative to similar women who never gave birth. By comparison, low skilled women experience a lifetime wage loss of only $49,000.

Using the 1979 National Longitudinal Survey of Youth (NLSY), Wilde et. al. divided women into high, medium, and low skill categories based on their Armed Forces Qualification Test (AFQT) scores. The authors use these skill categories, combined with earnings, labor force participation, and family formation data, to chart the labor market progress of women before and after childbirth, from ages 14-to-21 in 1979 through 41-to-49 in 2006, this study’s final sample year.

High scoring and low scoring women differed in a number of ways. While 70-75 percent of higher scoring women work full-time all year prior to their first birth, only 55-60 percent of low scoring women do. As they age, the high scoring women enjoy steeper wage growth than low scoring women; low scoring women’s wages do not change much if they reenter the labor market after they have their first child. Five years after the first birth, about 35 percent of each group is working full-time. However, the high scoring women who are not working full-time are more likely to be working part-time than the low scoring women, who are more likely to leave the workforce entirely.

and

Men’s earning profiles are relatively unaffected by having children although men who never have children earn less on average than those who do. High scoring women who have children late also tend to earn more than high scoring childless women. Their earnings advantage occurs before they have children and narrows substantially after they become mothers.