This article was published in TSE science magazine, TSE Mag. It is part of the Autumn 2023 issue, dedicated to “The World of Work”. Discover the full PDF here and email us for a printed copy or your feedback on the mag, there.
By encouraging working women to decrease their labor supply, motherhood may explain most of the gender inequality that remains in rich countries. Francesca Barigozzi, Helmuth Cremer and Emmanuel Thibault discuss which policies could help mothers escape the wage traps set by social expectations.
How does society make women pay for having children?
Unfair distribution of childcare responsibilities is a major cause of lower labor earnings for mothers. As the main caregiver, mothers must often give up part or all of their paid work in the job market for unpaid work at home. When their children are young, mothers choose to work fewer hours, or in lower-paid but more child-friendly jobs, or not at all. This loss of average earnings that results is known as the “motherhood penalty”. In France, studies suggest mothers lose around 30% of their income over the five years following a birth. Fathers do not appear to suffer any loss of income.
Are mothers from poorer backgrounds more vulnerable?
Women with high socioeconomic status typically accumulate more skills and experience because they are more educated. This human capital reduces the likelihood of beginning a negative spiral and mitigates the motherhood penalty. Without it, women from poorer backgrounds are more at risk of entering a wage trap.
What does your research reveal about the motherhood penalty?
We look at changes in various labor-market outcomes – such as working hours, wages, and labor income – following the birth of a child. Our model helps to explain the existence of the child penalty for mothers documented by the empirical literature.
We show that the temporary decrease in mothers’ labor supply due to childbearing may activate a negative spiral of decreasing effort and decreasing wages called a “wage trap”. This can create permanent poverty and a permanent gap in labor earnings between genders.
Which family policies appear to be the best solutions?
When human capital increases with work experience and on-the-job training, temporary subsidies to mothers' wages and the provision of childcare are cost-effective. Subsidies such as income tax credits help mothers to exit the wage trap and speed up the recovery of pre-motherhood earnings. By encouraging mothers' labor supply, subsidies can compensate for human capital losses and spark a positive spiral of increasing labor supply and wages.
Other policies like paternity leave, formal childcare subsidies, and in-kind provision of formal childcare can be useful in reducing the cost of going back to work, but they only indirectly affect mothers’ labor supply decisions.
Policies that may backfire are (long) maternity leave and cash transfers. These measures may temporarily make up for lost earnings but they also reduce the incentives to invest effort in going back to work, potentially reinforcing the negative spiral of the motherhood wage trap.
Will the gender gap ever be closed?
The motherhood penalty is responsible for a much larger portion of the gender gap in earnings than it was three decades ago. While family policies can help, eradicating the gender gap will require a shift in societal norms, with both parents sharing childcare, housework, and other family responsibilities equally.
FURTHER READING
The motherhood wage and income traps. Francesca Barigozzi, Helmuth Cremer and Emmanuel Thibault, 2023.
