The long-term effects of reducing work after first childbirth

The choice to reduce work has a life-long effect on women’s incomes due not only to the direct effect of reducing hours, but also to the cumulative effect of lost experience.

Factsheet

Schools involved School of Social Work
Business School
Institute(s) Institute for Social Security and Social Policy
Funding organisation SNSF
Duration 01.04.2020 - 28.02.2022
Head of project Prof. Dr. Debra Hevenstone
Project staff Prof. Dr. Ana Fernandes
Keywords Female labor market, Child penalty, Part-time work

Situation

When women reduce work after having a first child, the effect is not just on their immediate income, but on their lifetime income, due to lost experience. In this project we estimate the lifelong effects, with a special focus on the subset of women whose partners lose their jobs while they are pregnant—a selective low-skill group.

Course of action

In this project we descriptively look at the long-term effects of childbirth on womens’ incomes, looking at heterogeneity in the population. I an attempt to get at the causal long-term effects we compare two groups of new mothers, those who partners lost their jobs during pregnancy and similar individuals whose partners lose their jobs when children are older. This estimation is representative of a somewhat selective group of women with lower skilled partners. On the other hand, partner job loss during pregnancy is almost certainly exogenous, as men rarely quit or lose their jobs during their partner’s first pregnancy.

Result

Results show that women earn more even 17 years after their first pregnancy, due to the pressure to stay in the labor market when their partner lost their job. The income gains are so high that these women’s’ incomes are still higher than their higher-earning peers whose partners did not lose their jobs, 17 years later. Results suggest that maybe women are taking choices that lead to unanticipated dramatic life-long income losses.