The motherhood wage penalty and non-working women
There is substantial evidence that women with children bear a wage penalty due to their motherhood status. This wage gap is usually estimated by comparing the wages of working mothers to childless women after controlling for human capital and individual characteristics. This method results in selection bias because non-working women are excluded from the sample. Using a model of fertility and working decisions, I examine how excluding non-working women affects the measurement of the motherhood wage penalty. The model shows that mothers face different reservation wages due to variance in non-labor income and preference for child care. Given the same non-labor income, a mother with a relatively high wage may choose not to work because of her strong preference for time with children. In contrast, a childless woman who is not working simply faces a relatively low wage. Thus, empirical analyses that focus only on employed women may overestimate the motherhood penalty.
Volume (Year): 34 (2014)
Issue (Month): 2 ()
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