Panel Paper: How the Timing of Children Affects Earnings in 20 Occupations

Friday, November 3, 2017
Stetson G (Hyatt Regency Chicago)

*Names in bold indicate Presenter

Liana Christin Landivar, U.S. Department of Labor

Many studies show that mothers earn less than childless women, resulting in an “earnings penalty” for mothers. Recent studies have begun to explore how this earnings penalty diverges by occupation, but there remains disagreement on who experiences the largest penalties and under what conditions. Women in professional occupations have access to more extensive workplace benefits compared with women in other occupations. These benefits may help reconcile work and family responsibilities which may mitigate career disruptions and resulting lower wage trajectories. Yet because of their greater earnings potential, extensive training and certification requirements, and longer career ladders, women in professional occupations who re-enter after a career break may experience more significant career and earnings penalties than other women.

One strategy women employ to mitigate some of the earnings penalty is to delay fertility until they have accumulated experience and work tenure. Indeed, fertility delay has been linked to increased labor force participation, earnings, and continuity of employment. Yet, gains to fertility delay may also differ by occupation. It is possible that fertility delay is a viable strategy to boost earnings only among women who are in a career that rewards investments in human capital and affords a “ladder” to climb. In jobs that do not offer significant paths for promotion, do not reward tenure or career networks, nor make use of investments in higher education, it is not clear if fertility delay would matter. Examining the timing of children jointly with occupation may reconcile some of the disagreements in the literature as to whether professional women experience larger or smaller earnings penalties.

Bringing these two lines of inquiry together, in this study I explore whether the earnings gap between mothers and childless women varies by occupation and by timing of children. To determine how the timing of children affects earnings within each occupation, I use data from the 2015 American Community Survey Public Use Microdata Sample (ACS). As the largest household survey in the United States, the ACS offers robust estimates of mothers in detailed occupations allowing me to examine how the earnings penalty differs by timing of children across 20 occupations. Women were classified as having delayed fertility based on their age and the ages of their children.

I show that occupation is key to the earnings penalty and the effectiveness of fertility delay to mitigate the penalty. Mothers in professional occupations experienced the largest earnings penalty for early motherhood, but also the largest earnings premium for delayed fertility. Mothers in non-professional occupations did not experience a significant earnings premium at any age, rather several occupations had an earnings penalty for delayed motherhood. Thus, fertility delay was ineffective as a means for increased earnings in some of the lowest-wage occupations. While delaying fertility may be an effective financial strategy for women in occupations requiring advanced degrees or longer tenure for career advancement, women in low-wage occupations with short career ladders and high turnover experienced little economic benefit from older motherhood.