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The Career Costs of Children
Abstract
We estimate a dynamic life-cycle model of labor supply, fertility and savings, incorporating occupational choices, with specific wage paths and skill atrophy that vary over the career. This allows us to understand the trade-off between occupational choice and desired fertility, as well as the sorting both into the labor market and across occupations. We quantify the life-cycle career costs associated with children, how they decompose into loss of skills during interruptions, lost earnings opportunities and selection into more child-friendly occupations. We analyze the long-run effects of policies that encourage fertility and show that they are considerably smaller than short-run effects.
... By drawing a new, causal link between child mortality decline and increases in women's labor force participation and childlessness, we provide a new theory of drivers of childlessness that contributes to an active literature in this area (Baudin et al. 2019), (Baudin et al. 2015), (Gobbi 2013), (Currie and Schwandt 2014), (Ananat et al. 2007). 3 Our key nding that child mortality decline encourages fertility delay and higher rates of women's labor force participation augments research on the interplay between fertility and women's careers (Lundborg et al. 2017), (Adda et al. 2017), (Jensen 2012), Albanesi and Olivetti (2014), (Albanesi and Olivetti 2016), (Goldin and Katz 2002), (Goldin 1997), and research on fertility timing (de la Croix and Pommeret 2018), (Herr 2016), (Choi 2017), (Ananat and Hungerman 2012). Our contribution here is to identify child mortality decline as a factor driving both fertility delay and women's labor force participation. ...
... Adda et al. (2017) also study a model in which women choose fertility over the life cycle, which they use to quantify the career costs of fertility in an environment where child mortality and health is held constant. Our model makes a complementary contribution by providing a clear analysis of the effects of health shocks. ...
We investigate women’s fertility, labor and marriage market responses to a health innovation that led to reductions in mortality from treatable causes, and especially large declines in child mortality. We find delayed childbearing, with lower intensive and extensive margin fertility, a decline in the chances of ever having married, increased labor force participation and an improvement in occupational status. Our results provide the first evidence that improvements in child survival allow women to start fertility later and invest more in the labor market. We present a new theory of fertility that incorporates dynamic choices and reconciles our findings with existing models of behavior.
... Indeed, hiring-subsidized firms increase their hiring of women with lengthy labor market interruptions (long-term non-employed), and women who are mothers. This is an important finding as lengthy labor market interruptions after childbearing can lead to a loss of skills, making reentry into the labor market difficult for mothers (Adda, Dustmann and Stevens, 2017). Although they are long-term non-employed, these new female hires, who possess higher education and a higher wage earned in their previous job, seem more positively selected than the average firm's hire on other observables. ...
... Although they are long-term non-employed, these new female hires, who possess higher education and a higher wage earned in their previous job, seem more positively selected than the average firm's hire on other observables. Finally, preliminary analysis shows that these new female hires seem more likely to remain employed in the firm in the medium- Although these female hires seem more positively selected than the average hire on some observables, such as education, they also have longer non-employment spells, which could lead to human capital depreciation and, in turn, to a decrease in productivity (Adda et al., 2017;Blundell, Costa Dias, Meghir and Shaw, 2016). Our findings suggest that firms needed a policy incentive to hire these workers. ...
This thesis investigates how taxes levied on firms and firms’ management composition affect firms and workers. The first essay focuses on Germany, where profit taxation is set at the municipality level. We show that an increase in the profit tax rate by 1 percentage point reduces municipality employment by 1.17%, municipality wages by 0.52%, and the number of establishments operating in the municipality by 0.5%. Whereas smaller, lower-paying establishments primarily drive establishment exit, within-establishment wage and employment declines are most pronounced in higher-paying establishments, causing a reduction in job-to-job mobility. Between-establishment wage growth contributes to the wage reductions experienced by workers hit by a profit tax increase. The second essay examines hiring subsidies—a temporary cut to payroll taxation for new hires—introduced in Italy in 2013. We combine a matched difference-in-differences design and zoom onto the firms that use the hiring subsidy. We find that these firms hire women with lengthy labor market interruptions and who are mothers. These women are better educated than the average firm’s hire and remain employed long-term in the firm. Preliminary heterogeneity analysis suggests that the subsidy could operate as a mechanism which permits firms to learn about the potential productivity of these female workers. The third essay investigates the gender composition of management in the firm of first employment. It analyses its impact on the short- and long-term career and family-related decisions of female labor market entrants in Italy. We find that starting a labor market career in a firm with more female managers is associated with a higher probability of remaining in employment, higher job-to-job mobility, particularly towards better-paid jobs, and a higher probability of returning to work after maternity leave. Our analysis suggests that having women in executive positions could contribute to women’s labor market success.
... She argues that this could be because the gender identity norms have been fully internalised and directly shape one's preferences, or because of concerns about the reputational consequences of deviating from the prescribed behaviour. Countering such expectations may be costly and may even inhibit women when deciding how much to invest in education and careers (Adda et al, 2017). ...
The COVID-19 pandemic has caused unexpected disruptions to Western countries which affected women more adversely than men. Previous studies suggest that gender differences are attributable to: women being over-represented in the most affected sectors of the economy, women’s labour market disadvantage as compared to their partners, and mothers taking a bigger share childcare responsibilities following school closures. Using the data from four British nationally representative cohort studies, we test these propositions. Our findings confirm that the adverse labour market effects were still experienced by women a year into the COVID-19 pandemic and that these effects were the most severe for women who lived with a partner and children, even if they worked in critical occupations. We show that adjusting for pre-pandemic job characteristics attenuates the gaps, suggesting that women were over-represented in jobs disproportionately affected by COVID-19 pandemic. However, the remaining gaps are not further attenuated by adjusting for the partner’s job and children characteristics, suggesting that the adversities experienced by women were not driven by their relative labour market position, as compared to their partners or childcare responsibilities. The residual gender differences observed in the rates of active, paid work and furlough for those who live with partner and children point to the importance of unobserved factors such as social norms, preferences, or discrimination. These effects may be long-lasting and jeopardise women’s longer-term position through the loss of experience, leading to reinforcement of gender inequalities or even reversal of the progress towards gender equality.
... Ahora bien, hasta este momento solo se consideraron dos resultados posibles en la elección de las mujeres ocupadas: ser trabajadora asalariada o ser emprendedora. Sin embargo, la elección de ocupación femenina resulta de un proceso más complejo que surge como parte de la elección de participación laboral femenina en la que diversos factores confluyen en esta decisión, como la maternidad (Adda, Dustmann y Stevens, 2017;Berniell et al., 2021a, Berniell, de la Mata, Edo y Marchionni, 2021b; Kleven, Landais, Posch, Steinhauer y ZweimWüller, 2019; Lundborg, Plug y Rasmussen, 2017) y la flexibilidad laboral (Berniell et al., 2021c). ...
Este trabajo analiza la influencia de la educación formal alcanzada por las mujeres de América Latina en la probabilidad de convertirse en emprendedoras. Para el estudio se utilizan datos del Banco de Desarrollo de América Latina (CAF) de la Encuesta de Talento Empresarial de 2012. Se estima para mujeres activas modelos de probabilidad de ser emprendedoras procurando ajustar por el sesgo de selección de educación utilizando variables instrumentales. También se ajusta por sesgo de auto-selección incluyendo mujeres inactivas en el modelo de Heckman de dos etapas. Los resultados sugieren para las mujeres una relación negativa entre el nivel educativo y la probabilidad de emprender. En particular, esto se observa con mayor fuerza en el caso de emprendedoras por necesidad y cuenta propistas.
... 3 For instance, Adda et al. (2017) find that the greater part of the career costs of children-losses in lifetime labor earnings-can be explained by the intermittency or reduced labor supply, while the remainder part is due to wage changes as a result of lost investments in skills and depreciation. Also, Jung and Kuhn (2019) show that accounting for job stability is important to explain differences in labor earnings over the life-cycle. ...
In this paper we show that motherhood triggers changes in the allocation of talent in the labor market beyond the well-known effects on gender gaps in employment and earnings. Based on an event study approach around the birth of the first child and retrospective data for 29 countries drawn from SHARE, we assess the labor market responses to motherhood across "talent" groups—i.e., groups with different educational attainment, relative performance in Math at age 10, and personality traits associated to entrepreneurial ability. We find that while even the most talented women—both in absolute terms and relative to their husbands—leave the labor market or uptake part-time jobs after the birth of the first child, all men, including the least talented, stay employed. We also find that motherhood induces a negative selection of talents into self-employment. Overall, our results suggest relevant changes in the allocation of talent caused by gender differences in non-market responsibilities that can have sizable impacts on aggregate market productivity.
... The underlying assumption is that life stages/transitions (e.g. from first job to early-career, single to parenthood, etc.) affect career decisions (cf. Adda et al., 2017). Individuals, aligning their lives and careers, seek optimal person-career fit (Akkermans and Tims, 2017;Tims and Akkermans, 2020), this is, compatibility between their career experiences and their motivations, needs and competencies throughout their life and careers (De Vos et al., 2019). ...
Purpose
Externalities influence the career trajectories of self-initiated expatriates (SIEs) and their respective career crafting. This study aims to explore the international career crafting of SIEs (encompassing their proactive career reflection and construction), taking the combined external influences of complexity, chance and change into consideration.
Design/methodology/approach
The authors employ a qualitative (interpretative) approach, combining career crafting and the chaos theory of careers (CTC) to further understand, from an individual standpoint, the impact of externalities on the career crafting strategies of 24 SIEs who have relocated within the European Union.
Findings
The authors show that SIEs' proactively craft their careers to varying degrees and with varying frequency. The CTC – incorporating complexity, chance and change – allows for a more nuanced understanding of SIEs' career crafting.
Originality/value
This paper applies the concept of career crafting to an international context, exploring the impact of externalities on SIEs' careers. In this way, the authors combine two previously separate theories, extend the application of career crafting to an international career context and emphasise the role of temporality and the whole-life view of career in SIEs’ career crafting approach.
This paper evaluates the financial and economic consequences of being denied an abortion. We link credit report data to the Turnaway Study, which collected high-quality, longitudinal data on women receiving or being denied a wanted abortion in the United States. We compare financial outcomes over a ten-year period for women who had pregnancies just above and below a gestational age limit allowing for a wanted abortion. Outcomes evolved similarly for the two groups prior to the abortion encounter. Following the encounter, women who were denied an abortion experience a large increase in financial distress that remains for several years. (JEL G51, I18, J13, J16)
Over the last several years, highly accurate methods of sex selection before conception have been developed. Given that strong preferences for sex variety in offspring have been documented for the U.S., we ask what the demographic consequences of sex‐selection technology could be. Lacking variation across space and time in access to this technology, we estimate a dynamic programming model of fertility decisions with microdata on fertility histories. We leverage the quasi‐experimental variation inherent in the random determination of sex to identify the key structural parameter characterizing preferences for sex variety in offspring. We then simulate the introduction of this technology. While this technology can reduce fertility by allowing parents to efficiently reach their preferred sex mix, it could also increase it. This is because without this technology, many parents may opt not to have another baby given the uncertainty about its sex. Results suggest that these two effects operate simultaneously, but on net, sex‐selection technology ends up reducing the average family size among married women by less than 2% in the steady state, a much smaller decline than the one that would be predicted by alternative methods.
We document that women are less likely than men to be in “risky” occupations, i.e., those exhibit large within-occupation wage dispersion. We first demonstrate that a new theoretical channel—the competitive structure of the marriage market—may incentivize both men and women to choose riskier careers with lower wage returns. We then show that a unifying factor—women’s relative inability to reap the benefits of a risky career due to their shorter reproductive span and consequent career-family trade-off—can help rationalize a set of gender differences in labor-market and marriage-market outcomes. Using data from the United States, we provide empirical evidence that supports the model predictions.
In most OECD countries, fertility level is below the natural generation replacement level, and many OECD countries implement pro-natal policies, including direct cash transfer schemes. However, evaluations of the long-run impact of such policies are surprisingly rare. We investigate whether the cash transfer increases completed fertility, exploiting a quasi-experiment from a pro-natal cash transfer called Allowance for Newborn Children (ANC). We first devise a measure of ANC impact for different birth cohorts, because the policy lasted for a decade and affected cohorts with different intensities at different ages. The results show that ANC impact on fertility has little permanent component.
We develop a structural model of female employment and fertility which accounts for intertemporal feedback effects between these two outcomes. To identify the effect of financial incentives on employment and fertility we exploit variation in the tax and transfer system, which differs by employment state and number of children. Specifically, we simulate in detail the effects of the tax and transfer system, including child care costs. The model provides estimates of the structural preferences of women that can be used to study the effect of various policy reforms. Results show that increasing child care subsidies, conditional on employment, increases the labor supply of all women as well as the fertility rates of the childless and highly educated women.
We examine the small-sample properties of the generalized method of moments estimator applied to models of covariance structures, in which case it is commonly known as the optimal minimum distance (OMD) estimator. We find that OMD is almost always biased downward in absolute value. The bias arises because sampling errors in the second moments are correlated with sampling errors in the weighting matrix used by OMD. Furthermore. OMD is usually dominated by equally weighted minimum distance (EWMD). We also propose an alternative estimator that is unbiased and asymptotically equivalent to OMD. The Monte Carlo evidence indicates, however, that it is usually dominated by EWMD.
We compare the performance of maximum likelihood (ML) and simulated method of moments (SMM) estimators for dynamic discrete choice models. We construct and estimate a simplified dynamic structural model of education that captures some basic features of educational choices in the United States in the 1980s and early 1990s. We use estimates from our model to simulate a synthetic data set and assess the ability of ML and SMM to recover the model parameters on this sample. We investigate the performance of alternative tuning parameters for SMM.
This paper distills and extends recent research on the economics of human development and social mobility. It summarizes the evidence from diverse literatures on the importance of early life conditions in shaping multiple life skills and the evidence on critical and sensitive investment periods for shaping different skills. It presents economic models that rationalize the evidence and unify the treatment effect and family influence literatures. The evidence on the empirical and policy importance of credit constraints in forming skills is examined. There is little support for the claim that untargeted income transfer policies to poor families significantly boost child outcomes. Mentoring, parenting, and attachment are essential features of successful families and interventions to shape skills at all stages of childhood. The next wave of family studies will better capture the active role of the emerging autonomous child in learning and responding to the actions of parents, mentors and teachers.
The converging roles of men and women are among the grandest advances in society and the economy in the last century. These aspects of the grand gender convergence are figurative chapters in a history of gender roles. But what must the "last" chapter contain for there to be equality in the labor market? The answer may come as a surprise. The solution does not (necessarily) have to involve government intervention and it need not make men more responsible in the home (although that wouldn't hurt). But it must involve changes in the labor market, especially how jobs are structured and remunerated to enhance temporal flexibility. The gender gap in pay would be considerably reduced and might vanish altogether if firms did not have an incentive to disproportionately reward individuals who labored long hours and worked particular hours. Such change has taken off in various sectors, such as technology, science, and health, but is less apparent in the corporate, financial, and legal worlds.
SUMMARY While using financial incentives to increase fertility has become relatively common, the effects of such policies are difficult to assess. We propose an identification strategy that relies on the fact that the variation in wages induces variation in benefits and tax credits among ‘comparable’ households. We implement our approach by estimating a discrete-choice model of female participation and fertility using individual data from the French Labor Force Survey and a detailed representation of the French tax–benefit system. Our results suggest that financial incentives have had a significant effect on fertility decisions in France. As an example, we simulate the effects of an additional, unconditional child credit of 150 euros per month. The effects are strongest for the third child. Copyright © 2013 John Wiley & Sons, Ltd.
We consider the impact of Tax credits and income support programs on female education choice, employment, hours and human capital accumulation over the life-cycle. We thus analyze both the short run incentive effects and the longer run implications of such programs. By allowing for risk aversion and savings we are also able to quantify the insurance value of alternative programs. We find important incentive effects on education choice, and labor supply, with single mothers having the most elastic labor supply. Returns to labour market experience are found to be substantial but only for full-time employment, and especially for women with more than basic formal education. For those with lower education the welfare programs are shown to have substantial insurance value. Based on the model marginal increases to tax credits are preferred to equally costly increases in income support and to tax cuts, except by those in the highest education group.
Changing social norms, as reflected in the interactions between spouses, are hypothesized to affect the employment rates of married women. A model is built in order to estimate this effect, in which the employment of married men and women is the outcome of an internal household game. The type of the household game is exogenously determined as either Classical or Modern. In the former type of household, the spouses play a Stackelberg leader game in which the wife's labor supply decision is based on her husband's employment outcome while the latter type of household is characterized by a symmetric and simultaneous game that determines the spouses' joint labor supply as Nash equilibrium. Females in Modern households are predicted to have higher employment rates than women in Classical households if they have narrower labor market opportunities and/or higher relative risk aversion. The household type is exogenously determined when the couple gets married and is treated as unobserved heterogeneity. The model is estimated using the Simulated Moments Method (SMM) and data from the Panel Study of Income Dynamics (PSID) survey for the years 1983-93.The estimated model provides a good fit to the trends in employment rates and wages. We estimate that 38 percent of households are Modern and that the participation rate of women in those households is almost 80 percent, which is about 10 higher than in Classical households. Meanwhile, the employment rate among men is almost identical in the two types of household.