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The child penalty for graduates

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Convergence between men’s and women’s earnings has stalled in many countries despite convergence in characteristics such as education and experience. Women tend to have similar earnings to men early in their careers, but a substantial gap emerges over time, particularly for higher earners. Increasingly, researchers are focussing on the impact of children on women’s earnings as a potential explanation.

Since women tend to take on more childcare responsibilities than men, they may cut their hours of work, request reduced responsibilities, or suffer discrimination if stereotyping leads to perceptions of lower commitment to work than men. Alternatively, they may choose less demanding occupations with low earnings growth at the outset of their careers. An interesting line of research posits that women are particularly penalized in “time greedy” jobs such as business and law, where flexibility in working hours is strongly valued.

In our work we use administrative data on earnings from Ireland to examine the child penalty for graduates. Detailed field of study data allow us to control fully for gender differences in educational choices. We find that the gender earnings gap for highly educated women with children grows much more rapidly in the decade after graduation than the gap for women without children, reaching 30% compared to about 10% for non-mothers. We use an event study approach to check whether this difference reflects differences in unobservable characteristics between the two groups of women or is instead a causal impact of motherhood. We find no clear trends in earnings before childbirth but a 27% drop in earnings in the year after childbirth, a drop that grows slightly in subsequent years. The substantial fall in earnings immediately after childbirth supports a causal interpretation. 

By contrast, using the same methodology we find no evidence of a reduction in earnings around childbirth for men. 

While the fall in earnings is bigger in some fields (business and law) than others (STEM), the differences are not substantial; a large persistent childbirth effect can be seen in all fields. Our survey data compares hours of work in the years before and after childbirth. We find that hours of work do fall, but not by enough to explain the fall in earnings. The analysis suggests that about half the earnings drop is accounted for by hours of work.

We also reject the hypothesis that the motherhood penalty is driven by women changing employers after childbirth; almost all the childbirth effect arises among women who stay with the same employer. It seems likely that women are changing roles within the firm, either by choice or because their previous roles are difficult to combine with motherhood.

This raises the question as to why it is mothers who generally choose to reduce work hours or responsibilities after the birth of the child. That most of the impact of children is experienced by women who stay with their existing employer suggests the importance of flexible work practices in reducing the child penalty—which is central to further progress toward achieving gender equality in the workplace. 

© Aedín Doris, Donal O’Neill, and Olive Sweetman

Aedín Doris is Assistant Professor of Economics at Maynooth University
Donal O’Neill is Professor of Economics at Maynooth University and a Research Fellow of IZA.
Olive Sweetman is Assistant Professor of Economics at Maynooth University

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