Working Paper: CEPR ID: DP208
Authors: Heather Joshi
Abstract: The opportunity costs of rearing British children, in terms of cash earnings forgone by their mother, are estimated for a typical family. Data from the 1980 Women and Employment Survey provide estimates for hourly pay as a function of work experience and current hours of work. In addition, these data are used to generate participation and hours profiles for representative women with different numbers of children. These are then combined with the earnings function to simulate lifetime income. The simulations indicate that the earnings forgone as a result of bearing and rearing two children can be decomposed into three effects, of approximately equal magnitude: on participation, hours and pay. These effects exceed the direct costs of children and do not rise proportionally with family size. In addition, forgone earnings are sensitive to the spacing of births but not (undiscounted) to the timing of the first birth. The methodology and results of these simulations contrast markedly with those of a similar study of United States women. We argue that the non-linearity of the earnings function in our study and state dependence in British labour force transitions violate the assumptions of the multi-state labour force life-table on which the United States study was based.
Keywords: fertility; child care; human capital; labour supply; labour force lifetable; domestic division of labour
JEL Codes: 813; 840; 850
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Timing of Births (J13) | Opportunity Costs of Childbearing (J13) |
| Family Size (J12) | Opportunity Costs of Childbearing (J13) |
| Childbearing (J13) | Reduced Earnings (J31) |
| Childbearing (J13) | Interruptions in Labor Force Attachment (J63) |
| Childbearing (J13) | Lower Hours Worked (J22) |
| Childbearing (J13) | Lower Hourly Pay (J31) |