Association for Public Policy Analysis & Management

Panel: The Costs of Motherhood and Caregiving to Women’s Lifetime Earnings

(Family and Child Policy)

It is important for policymakers to understand the lifetime financial costs of unpaid caregiving. In the short term, caregiving can affect earnings if caregivers take lower-paying jobs, reduce their work hours, or leave their jobs. In the long term, caregiving can affect work tenure, promotions, and retirement savings and timing. Among women who remain in the labor force or return after a break, some of these effects are also reflected in the motherhood earnings penalty.

Leveraging government data including the Survey of Income and Program Participation (SIPP), the American Community Survey (ACS), the National Longitudinal Survey of Youth (NLSY79), and the Social Security Administration’s lifetime earnings histories, this panel presents four papers on the effects of motherhood on women’s earnings. These papers use innovative methodologies to evaluate women’s lifetime earnings losses, as well as the motherhood earnings penalty among employed women. Together, these papers improve our understanding of the economic implications of caregiving. 

Mothers decide whether to remain in the labor force by comparing their earnings to the costs of purchasing care. However, the costs of labor force exit are steeper than the earnings loss for a non-employment spell. Therefore, it is important to have a full estimation of foregone earnings and other financial benefits. Paper 1 uses a dynamic microsimulation model to examine the impact of career disruptions on earnings and Social Security and employer-sponsored retirement benefits. They show that there is considerable diversity in financial outcomes based on caregiver characteristics.

Paper 2 explores how the motherhood earnings penalty varies based on women’s occupation and the timing of children. Only the ACS offers a sample large enough to precisely measure the effect of having children by women’s age and detailed occupation. Paper 2 shows that although delayed motherhood is one strategy women employ to reduce the earnings penalty, this is only effective at mitigating penalties among women in higher-earning professional occupations where fertility delay can allow for further education, training, and career ladder promotions. Mothers in lower-earning occupations experienced no gains to delayed fertility.

While mothers experience an earnings penalty, fathers benefit from an earnings premium. Paper 3 examines the proportion of the gender earnings gap explained by the fatherhood bonus and the motherhood penalty, and whether this proportion differs by socioeconomic characteristics. This requires longitudinal data with large samples and measures of labor-market experience. Paper 3 shows that using SIPP data linked with administrative earnings histories is a promising source to understand variation in the fatherhood bonus and the motherhood penalty.

The financial costs of caregiving are borne not only by women who experience penalties, but by their families through reduced family income. It contributes to family inequality as these penalties and premiums differ by occupation and socioeconomic characteristics. While most research on the motherhood earnings penalty focuses on individuals, Paper 4 takes a new approach by situating the focus of the earnings gap on couples. Using dyadic multi-level models with the NLSY, Paper 4 shows how within-couple earnings gaps vary across households and contribute to household inequality.