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The Impact of Children on Female Earnings in Britain

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  • Tarja K. Viitanen

Abstract

This paper examines the impact of children on female wages in the UK using the National Child Development Study. Empirically this involves using an extension of the Roy model, which simultaneously corrects for the endogeneity of labour force participation and fertility. The wage differential between women without children and women with children is estimated to range between 19% and 22% not accounting for endogeneity. This result confirms the findings of many previous studies, however, the results indicate substantial non-random selection into employment for women hence leading to biased OLS estimates. The wage differential reduces to 16%-18% instrumenting participation and fertility, however, using the estimates obtained from the double-selection model, the wage differential between mothers and childless women reduces to just 10%-13%.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.41357.de/dp415.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 415.

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Length: 22, 5 p.
Date of creation: 2004
Date of revision:
Handle: RePEc:diw:diwwpp:dp415

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Keywords: Female labour supply; Fertility; Wage differentials;

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References

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  1. Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-75, September.
  2. Lawrence F. Katz & Claudia Goldin, 2000. "Career and Marriage in the Age of the Pill," American Economic Review, American Economic Association, vol. 90(2), pages 461-465, May.
  3. Blundell, Richard & Walker, Ian, 1986. "A Life-Cycle Consistent Empirical Model of Family Labour Supply Using Cross-Section Data," Review of Economic Studies, Wiley Blackwell, vol. 53(4), pages 539-58, August.
  4. Gupta, N.D. & Smith, N., 2000. "Children and Career Interruptions: the Family Gap in Denmark," Papers 00-03, Centre for Labour Market and Social Research, Danmark-.
  5. Heckman, James J & Willis, Robert J, 1977. "A Beta-logistic Model for the Analysis of Sequential Labor Force Participation by Married Women," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 27-58, February.
  6. Albrecht, J.W. & Edin, P.A. & Vroman, S.B., 1995. "A Cross-Country Comparison of Attitudes Towards Mothers Working and their Actual Labor Market Experience," Papers 1995-28, Uppsala - Working Paper Series.
  7. Waldfogel, Jane, 1998. "The Family Gap for Young Women in the United States and Britain: Can Maternity Leave Make a Difference?," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 505-45, July.
  8. Christopher J. Ruhm, 1996. "The Economic Consequences of Parental Leave Mandates: Lessons from Europe," NBER Working Papers 5688, National Bureau of Economic Research, Inc.
  9. Sanders Korenman & David Neumark, 1990. "Marriage, Motherhood, and Wages," NBER Working Papers 3473, National Bureau of Economic Research, Inc.
  10. Joshi, Heather & Paci, Pierella & Waldfogel, Jane, 1999. "The Wages of Motherhood: Better or Worse?," Cambridge Journal of Economics, Oxford University Press, vol. 23(5), pages 543-64, September.
  11. Stephen Cameron & Christopher Taber, 2000. "Borrowing Constraints and the Returns to Schooling," NBER Working Papers 7761, National Bureau of Economic Research, Inc.
  12. Fishe, Raymond P. H. & Trost, R. P. & Lurie, Philip M., 1981. "Labor force earnings and college choice of young women: An examination of selectivity bias and comparative advantage," Economics of Education Review, Elsevier, vol. 1(2), pages 169-191, April.
  13. Waldfogel, Jane, 1995. "The Price of Motherhood: Family Status and Women's Pay in a Young British Cohort," Oxford Economic Papers, Oxford University Press, vol. 47(4), pages 584-610, October.
  14. Kathryn Shaw, 1994. "The Persistence of Female Labor Supply: Empirical Evidence and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 29(2), pages 348-378.
  15. Sprague, Alison, 1988. "Post-war Fertility and Female Labour Force Participation Rates," Economic Journal, Royal Economic Society, vol. 98(392), pages 682-700, September.
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Cited by:
  1. Nizalova, Olena Y. & Sliusarenko, Tamara, 2013. "Motherhood Wage Penalty in Times of Transition," IZA Discussion Papers 7810, Institute for the Study of Labor (IZA).
  2. Bertrand, Olivier & Hakkala, Katariina & Norbäck, Pehr-Johan, 2007. "Cross-Border Acquisition or Greenfield Entry: Does it Matter for Affiliate R&D?," Working Paper Series 693, Research Institute of Industrial Economics.
  3. Zhang, Xuelin, 2008. "The Post-childbirth Employment of Canadian Mothers and the Earnings Trajectories of Their Continuously Employed Counterparts, 1983 to 2004," Analytical Studies Branch Research Paper Series 2008314e, Statistics Canada, Analytical Studies Branch.
  4. Zhang, Xuelin, 2008. "Emploi des meres canadiennes apres la naissance d'un enfant et trajectoires des gains de leurs homologues occupees de facon continue, 1983 a 2004," Direction des etudes analytiques : documents de recherche 2008314f, Statistics Canada, Direction des etudes analytiques.

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