Panel Paper: Is There an Advantage to Working? the Relationship Between Maternal Employment, Child Outcomes, and Intergenerational Mobility

Thursday, November 6, 2014 : 3:25 PM
Nambe (Convention Center)

*Names in bold indicate Presenter

Martha Stinson, U.S. Census Bureau and Peter Gottschalk, Boston College
We address two related questions in the intergenerational mobility literature. First, do children with stay-at-home mothers during their preschool years have higher adult labor force participation rates and earnings? Working mothers may be associated with better future labor market outcomes for their children if their income buys more inputs into the child human capital production function and their behavior serves as a role model for their children.  On the other hand, stay at home mothers may produce more child human capital through the input of their personal time.  The human capital production function may also be different for sons and daughters, causing the impact of mothers’ work behavior to depend on the gender of the child.  For example, if the transmission mechanism is largely through the mother serving as a role model, the mother may have a larger influence on her daughter. In distinguishing these correlations, it is important to account for the selection effect of which mothers choose to work.

Given the correlation between mother work decisions and child outcomes, our second question is does this correlation perpetuate a child’s place in the earnings distribution relative to his or her parents?  Children of working moms may have a higher intergenerational earnings correlation and be more likely to stay in the same earnings decile as their parents, leading to the conclusion that maternal employment is correlated with relatively less mobility.  In this case, the mother working transmits advantage for children from high-earning families but does not overcome disadvantage for children from low-earning families.  On the other hand, if maternal employment is correlated with higher mobility, then it may be the case that maternal employment is positive for children from families that are less well-off.

We overcome data limitations of past studies by using the Survey of Income and Program Participation matched to SSA/IRS W-2 histories of parents and their children. These data provide the employment status and earnings of each family member at any year between 1978 and 2011 and enable us to use panel data and instrumental variable techniques to come closer to a causal impact of the mother's work decisions on later child outcomes. In addition to the earnings history, we make use of historical employer characteristics from administrative business data to differentiate between the types of jobs held by mothers and investigate whether these are correlated with child outcomes.  Using our various controls for the endogeneity of the mother’s work decision, we find few significant differences between the adult earnings of children with stay-at-home mothers and those with working mothers.  We do however see a significant positive correlation between mothers working during preschool years and daughters’ labor force participation between ages 22 and 33.  The remainder of the paper will focus on intergenerational earnings correlations and we expect that the correlation between labor force participation will impact the correlation between mother and daughter earnings for working mothers.