Economic Aspects of Motherhood Research Paper

1. The Mother’s Unpaid Job

The unpaid rewards and penalties of motherhood may have escaped attention from economists (Rathbone 1917 is an exception) because of the difficulty of valuing them on a money metric. Such quantification could seem inappropriate for a ‘labor of love’, but the element of selflessness in the ‘job description’ need not mean that it deserves no credit. The cartoonist, Posy Simmonds (1979) points this out in text for a spoof military-style recruitment poster:

A mother provides a vital service to the country which often goes unrecognised and unrewarded. Motherhood costs spare time and the chance to travel. But it does bring much in return: the chance to develop skills and resourcefulness. Above all, it is a challenge and a chance to ser e the country in a worthwhile way?…Today’s young mothers have got a job to do, whether it’s holding the fort single handed, being in the thick of action in a playgroup or fighting dangerous household germs?…It’s a good life in the Mothers, and it’s a REAL job too.

In most societies the mother’s ‘job’ is a multifold combination of manual and managerial tasks, but the ‘training’ is largely informal and starts when she is a little girl. Besides producing and nurturing infants, duties include taking a frontline interest in child health and education. Mothers usually play a decisive role in the allocation of consumption to their offspring. They also have an important role in a child’s psychological and social development. Mothers’ contribution to the emotional work of maintaining a family and its social network may last throughout their lives. Motherhood is a necessary condition for becoming a grandmother, in which role many women also contribute to family welfare.

The greater is a mother’s own human capital and economic autonomy, the greater is her potential to achieve good outcomes for her children. In poor countries, there is evidence of this in positive association of maternal education and child survival. In developed countries, there is evidence linking cognitive development of children to, inter alia, indicators of maternal inputs.

1.1 Domestic Production And The Domestic Division Of Labor

The New Home Economics (e.g., Becker 1991) recognizes that unpaid time in the home, combined with goods purchased on the market, yields valuable ‘home production.’ Among home outputs, such as meals and household repairs, are the production and maintenance of the next generation and their human capital. More children require a greater input of parental time. Alternatively, time can be used to improve the ‘quality’ of a given number. The parent primarily involved is normally the mother. In two-parent families, fathers generally spend less time than mothers in childrearing and other domestic tasks, though they generally provide more cash. In one-parent families, usually lone mothers, all the parenting, and most of the provisioning, falls on one parent.

The tendency for home production to be primarily mothers’ business—rather than fathers’—is attributed partly to biology, for example, because of women’s ability to breastfeed. Becker (1991) argues that it is reinforced by the scope for specialization (and trade) between partners. The gains are increased if the market pays higher rates to men than to women. The inevitability of such specialization is debatable (Joshi 1998), and its attractiveness to a mother depends on the security of her claim on the father’s earnings. In many parts of the world this has never been very reliable, and in others the structure of paternal financial obligations is weakening (Folbre 1994).

1.2 Other Unquantified Benefits And Costs Of Motherhood

Before turning to the more quantifiable costs of motherhood, its benefits must be acknowledged. Mothers (fathers too) usually benefit directly from a loving relationship with their children, and from taking a pride in them. Under some circumstances children provide help, social status and security, or assure a lineage. The kin group, indeed wider society, can benefit from effective child rearing, and so do children themselves. Most of these items may be considered ‘noneconomic’, but they underlie the ‘demand’ for children despite their costs. Some of the costs of childrearing are also fairly intangible, such as the worry, fatigue, and the risk of grief. In poor countries there are also still serious health hazards associated with childbirth.

2. Earnings Costs Of Motherhood

Besides the direct material costs of material expenditure on children, there are indirect costs of mothers’ forgone earnings. Where maternal duties displace productive work, motherhood has an economic ‘opportunity’ cost. If a mother’s earnings would be higher without children, there is an earnings shortfall due to motherhood. Conversely, if she maintains the higher earnings trajectory by not having children, some of her output has been gained at the expense of forgone motherhood.

The time costs of motherhood are not only diverted from paid work. Leisure, sleep and freedom of movement may also be affected. Forgone earnings (and forgone nonpecuniary benefits of employment) do not arise in cases where the woman is not expecting to do paid work in any case, or where she can combine productive work with taking care of her children. Various arrangements for nonmaternal care permit mothers to spend time in paid work, reducing or eliminating the lost earnings, though childcare may have to be purchased.

Thus, the prospect of forgone earnings varies by context, as well as the number and timing of births. It becomes important where childless women would be lifelong full-time members of a labor force, where workplaces are unsuited to simultaneous childcare, and where care by the mother is the major mode of care for pre-school children. If hours of employment are inflexible, mothers may not be able to earn at all, but where nonstandard hours are available, mothers’ earnings may be modified. The earnings costs of motherhood are amplified if the opportunity to accumulate earning power through experience and training depends on continuous full-time employment.

2.1 An Example From The USA

Calhoun and Espenshade (1988) attempt to quantify lifetime foregone earnings for US women on the basis of data observed mainly in the 1970s. Allowing for effects on participation, hours and rates of pay, they estimate average forgone gross earnings, for white and black women, by number, timing and spacing of births, and educational level. The central estimate for white women with two children is about 10 percent of potential earnings over the ages 25 to 54, five times greater than the cost for blacks, who reduce market hours less. The estimated earnings costs rise with the woman’s education, and, roughly proportionally, with the number of children. Deferring childbearing reduces the earning loss somewhat for whites, but had the opposite effect for blacks, while effects of birth spacing are minor. This study illustrates the diversity of earnings effects implied in one country by the labor market patterns of a particular period. It also points out that the estimate of US$25,000 forgone per (white) child (1981 prices), is very much less than the direct expenditure costs, which the authors put around US$80,000 over the first 18 years. Among other expenditures, this includes the purchase of daycare services associated with the employment of US mothers of preschool children.

2.2 A British Example

A similar exercise was attempted for the UK by Joshi (1990), but estimating typical, rather than average profiles. Based on behavior in 1980, the illustrative mother would remain completely out of employment while she had children under school age. She would return to employment part-time initially and when she eventually resumed full-time, her rate of pay would fall short of her childless counterpart, assumed to earn full-time continuously, and to gain increments thereby. An additional feature of the British model is an extra pay penalty in part-time jobs. Though a common solution to reconciling domestic and market claims on time, these are generally low status, low skill, dead-end jobs, off any career track. Downward occupational mobility on re-entering employment was also common. The estimated foregone earnings are illustrated for two children. On central assumptions, the sum forgone was around half potential lifetime earnings after childbearing at age 25. In further contrast to the US estimates, the costs did not increase in proportion to the number of births. There appeared to be economies of scale in having extra children, when the pre-school care is self-provided. If births are reasonably closely spaced, the next child can, for some years, ‘free ride’ on the fact that the mother would be at home anyway. Another contrast to the US estimates is that the earnings costs in the UK are of a similar order of magnitude to direct costs (Davies and Joshi 1995). This partly reflects more purchased child care in the US but perhaps also more medical expenditure.

2.3 Foregone Earnings In Some European Countries

Estimates of typical lifetime earnings in other European countries (Joshi and Davies 1992), based also on data from around 1980, showed further international contrasts. While the trajectories of interrupted lifetime earnings were quite similar to the British in West Germany, the Swedish scenario showed a much smaller dip in lifetime earnings. Swedish institutions permit mothers to maintain labor force attachment through parental leave when their children are infants and, while their children are small, to work reduced hours, at no hourly pay penalty and with cheap, high-quality daycare services. The results for France polarized into those for the high skilled, where mothers of one or two maintain almost continuous full-time employment, and a low-skill scenario involving long absence from paid work. In the first case, there was little loss of earnings until the third child; in the other, the earnings costs were greatest for the first child. This exercise serves to illustrate the importance of public policies in shaping these patterns. Where daycare is subsidized and publicly provided, as in France and Sweden, mothers’ engagement in paid work is less perturbed than where mothers must make and fund their own arrangements on the market or informally.

2.4 British Forgone Earnings Updated

The picture of the earnings losses of the ‘typical’ British mother became out-dated. By the 1990s the maternal employment had risen. ‘Family friendly’ employment practices, such as flexible hours and career breaks, started to gain currency. Maternity leaves permitted career women to return to their fulltime jobs, and they turned increasingly to the market for daycare services from nannies, nurseries or child-minders. Very little of this was subsidized by either employers or state, until the very end of the decade. The US, by contrast, was already subsidizing daycare through tax deductions and Welfare-to-Work Programmes. Informal care by grandmothers, fathers and neighbors remains important but unsubsidized and unregulated in the UK. Davies et al. (2000) present an update of the estimates of foregone earnings in the UK, comparing the pictures generated by employment patterns around 1980 and 1994. The illustrative individuals are also given three educational levels. A polarization among mothers emerges again. For women with low skill, the loss of earnings has if anything increased, for the graduates the costs have diminished, close to zero for one or two children. For the mid-skill woman, forgone earnings have diminished moderately, reflecting her increased propensity to earn while her children are small. In contrast with the earlier US results, forgone earnings vary inversely with education.

2.5 Effects Of Motherhood On The Rate Of Pay

There have also been studies in several of the differences in rates of pay received by mothers and other women. Such a ‘family gap’ may become more salient as a source of low pay among women as the gender pay gap narrows. It may arise partly from superior initial earning power of women without children, but also because of interrupted employment experience, and the current constraints of maternal responsibility on productivity or bargaining power. Among seven industrial countries studied in the 1990s, the UK had the largest unadjusted family gap (mothers aged 24–44, 15 percent below the hourly pay of their childless contemporaries, particularly attributable to the part-time penalty in that county (Harkness and Waldfogel 1999)). This contrasted with a wage lead for mothers in Australia, negligible differences in Sweden, Finland and Canada, and more modest gaps in Germany (3 percent) and the US (9 percent). Regression estimates which control for education, age, ethnicity and place of residence find negative effects of increasing number of children on wages in all countries, greatest in the UK, where one child lowers the predicted wage by 9 percent, two children by 28 percent and three by 35 percent. The estimates in other countries are considerably less, for the impact of two children the runners up are 12 percent in Germany, 11 percent in Australia and 8 percent in the US. Countries with more labor force withdrawal by mothers tend to have the larger family gaps in women’s pay. The link between employment interruption and low wages for employed mothers is also apparent when comparing women within countries (Waldfogel 1997, Joshi et al. 1999). These analyses suggest that maintaining employment continuity through taking maternity leave protects women from the pay penalties of motherhood, but this is a recent phenomenon. Thus the pay penalties of motherhood are not universal or inevitable. They are affected by decisions of private and social policy.

2.6 Mothers’ Forgone Income

Whatever the size and composition of forgone earnings their cost is not necessarily borne only by the mother. In the first place, if she is taxed on her earnings, the state loses taxes. If she pools her net income with a partner, this pooling will spread the rest of the loss. Her partner is deprived of some share of the cash that would otherwise be earned. Davies and Joshi (1995) show that in the central British case (1980 based) the earnings costs of motherhood are spread roughly equally between the state, the woman and her partner (assuming partners split net income). If the partner does not contribute to the woman’s support, or is absent, she bears the earnings cost net of taxes and state benefits paid for children. Lone mothers face a double demand on their time as sole caregivers and sole breadwinners. Societies have tried various packages of policy to relieve this squeeze—state benefits, state childcare, collection of support from fathers, fostering and the support of the extended family.

Where pension entitlements are earnings-related, some of the earnings loss is deferred to old age. Unless pension systems deliberately compensate childrearing, mothers who have had interrupted earnings tend to face old age on lower pension than childless women and men, and their savings may also be lower. This shortfall of income in old age may be recompensed, in cash or services, by the children, depending on their earning power and whether such a claim on them is acknowledged. The issue of mothers’ incomes in old age will remain important into the twenty-first century.

3. Conclusions

The costs of rearing children may not all fall on mothers, they are usually shared by fathers and often at least partly subsidized by state services and transfers. They may be cut at the expense of the quality of the upbringing children receive, or, alternatively, if there are efficiency gains from rationalizing adult time inputs. International experience demonstrates that there is already a variety of ways in which paid work and parenthood are combined.

Although it is generally believed that better earning opportunities for women discourage childbearing, or lead to its postponement, the material reviewed here suggests that the terms on which motherhood and paid work may be combined can vary greatly, and hence the tradeoff between them is not immutable. It is affected by the organization of employment, the organization of state services for childcare and education, by the structure of state transfer systems and by the contributions made by fathers in time and cash. A mother’s time is an important input into childrearing, but it is not the only one, and women’s contribution to rearing children has never been their only one to the economy.

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