Friday, 31 March 2017

Career costs of children (updated)

In short, big.

A new paper just out in the Journal of Political Economy (vol. 125, no. 2, April 2017, pp. 293-337) look at "The Career Costs of Children". It is by Jerome Adda, Christian Dustmann and Katrien Stevens.

The abstract reads:
We estimate a dynamic life cycle model of labor supply, fertility, and savings, incorporating occupational choices, with specific wage paths and skill atrophy that vary over the career. This allows us to understand the trade-off between occupational choice and desired fertility, as well as sorting both into the labor market and across occupations. We quantify the life cycle career costs associated with children, how they decompose into loss of skills during interruptions, lost earnings opportunities, and selection into more child-friendly occupations. We analyze the long-run effects of policies that encourage fertility and show that they are considerably smaller than short-run effects.
Adda, Dustman and Stevens point out that women have a number of disadvantages in the labour market and note that
Having children may be one important reason for these disadvantages, and the costs of children for women’s careers and lifetime earnings may be substantial.
Interestingly Adda, Dustmann and Stevens look at the gender wage gap,
Using a sample of comparable male cohorts who made similar educational choices, we run simulations to understand better the wage differences between women and men over the life course and how these are affected by fertility decisions. We find that fertility explains an important part of the gender wage gap [about one third], especially for women in their mid-30s.
What drives the cost of children?
Thus, the costs of fertility consist of a combination of occupational choice, lost earnings due to intermittency, lost investment into skills, and atrophy of skills while out of work and a reduction in work hours when in work. In addition, fertility plans affect career decisions already before the first child is born, through the choice of the occupation for which training is acquired—an aspect that is important not only for policies aimed at influencing fertility behavior but also for understanding behavior of women before children are born. An important additional aspect for the lifetime choices of fertility and career is savings that help women to smooth consumption. Furthermore, fertility leads to sorting of women into work, with the composition of the female workforce changing over the life course of a cohort of women, because of different career and fertility choices made by women of different ability.
and early occupational choice really affects wages,
Occupational choices at the beginning of the career, and before any fertility decision is made, represent 19 percent of the overall costs induced through wages, indicating that a substantial portion of the wage-induced career costs of children is already determined before fertility decisions are made, through occupational choices conditioned on expected fertility pattern.
Another factor influencing women's is is the amenity value of an occupation with regard to children (which can be interpreted as the ease with which women in these occupations can combine work with child raising).
We present estimates of these amenity values, normalized to be zero for routine occupations, in panel C of table 3. The figures show that—in comparison to routine jobs—abstract jobs are least desirable when children are present. Our estimates imply that if abstract and manual occupations had the same amenity value as routine ones,the proportion of women opting for abstract or manual occupations would increase by 5 percent. The amenity of part-time work—an option chosen by many mothers in our data—is likewise lower in abstract jobs, as the second row of this panel shows. Our estimates imply that if women in abstract jobs had the same amenity value for part-time jobs as in routine ones, the proportion of part-time work in abstract jobs would be 7 percent higher by the age of 30.
All this points to there being a complex interaction between career and fertility decisions with the costs of children often being high.

Update: Thanks to a message in the comments section we learn that you can get an open access version of the paper here.

1 comment:

Anonymous said...

open access version (2015) here: [67 pp.]
- maybe this will inspire broader reading & comment?