Motherhood earnings penalties and work-family policies: Is more always better?

by Irene Boeckmann, Joya Misra & Michelle Budig

Mothers earn less than fathers and childless men on average, but also less than women without children at home. Part of these earnings difference can be explained by the work experience mothers might lose due to employment interruptions or part-time work while caring for their families.

Even after taking differences in education, labor market experience, job characteristics, work hours, and marital status, mothers still earn significantly less than women without care responsibilities.

Indeed, in a study we recently published, we find that U.S. mothers pay an earnings penalty of 8% per child.

American women are not alone in experiencing earnings losses in connection with motherhood. These earnings losses—often called “motherhood penalties”—can be found in most wealthy countries.

Our research examines mothers’ earnings in 21 countries in Western and Eastern Europe, North America, Australia and Israel. We find that mothers in all but three countries in the study incur statistically significant earnings penalties (controlling for age, education, relationship status, and part-time work).

However, the impact of children on women’s earnings is not the same everywhere, as seen in the figure below.  For example, mothers in western Germany, the Netherlands, and Luxembourg lose between 15-20% of their earnings per child. In contrast, children have little or no significant impact on women’s earnings in Poland, the Slovak Republic, Russia, Australia, and Israel.

Can public policy explain these differences? A range of country characteristics may matter, but work-family policies, especially those pertaining to family leave and childcare that target employed parents are of central interest. Parental leave policies provide mothers and fathers with time to care for children in the home without losing their job. Publicly supported childcare provisions substitute parental care and supports employed parents.

The generosity with which countries support working parents varies considerably across countries. For example, during the period we study, mothers in Canada could take a total of 25 weeks of job-protected leave with a benefit that replaced 55% of their previous earnings. In Sweden, parents could take 64 weeks of leave, of which one year was paid at 80% of previous earnings. In Germany, paid parental leave was available for two years, and in the Czech Republic leaves were available even up to three years, although parental leave benefits were meager in both countries. To date, the U.S. remains the only wealthy country without a paid leave policy at the federal level.

The extent to which parents and children, especially those under the age of three, have access to publicly supported childcare, also varies widely. In Canada, United States, and the Czech Republic, fewer than 6% of 0-3 year olds attended in public childcare, while 41% of Swedish children in this age group attended public childcare. Furthermore, with around half of older pre-school children enrolled, both the U.S. and Canada lagged behind many European countries, where at least 70% attended pre-school.

The question that remains is: Are more generous work-family policies better for mothers? Are they linked to smaller motherhood penalties? Our findings show that more generous policies generally mitigate the impact of children on mothers’ earnings. However, the policy specifics matter. Well-paid moderate-length leave and greater availability of publicly supported childcare are linked to smaller motherhood earnings penalties. On the other hand, very long leaves of several years, especially when accompanied by low benefits, seem to have detrimental effects.

In countries with no paid parental leave, the per-child penalty is around 9%, but declines to around 4.5% in countries with the most generous paid leaves.  However, in countries with very long leave entitlements (around three years, typically with low benefits), we find again larger motherhood penalties around 6% relative to countries with more moderate leaves. Very long leaves of absence may not only impact women’s (lost) experience. These very long leave entitlements may also increase incentives for employers not to hire or promote mothers into career-track positions. Even so, having no leave at all penalizes mothers more than long leaves.

In some countries, fathers are also entitled to leave in connection with childbirth. Although these leaves are usually short, we find that paternity leaves are generally associated with smaller motherhood penalties. While short paternity leaves are unlikely to substantially shift the parental division of labor, they may signal that fathers are valued as caregivers.

Additionally, over the past decade, a number of European countries have implemented parental leave policies that entitle families to additional leave if both parents take a stipulated minimum length of parental leave. By encouraging a more equal distribution of childcare and unpaid work among coupled parents these policies may also help mothers to stay employed, and limit the impact parenthood has on their earnings.

We consistently find that publicly financed childcare, especially for children under three, mitigates motherhood penalties. In countries with very low enrollment of very young children in childcare we found an approximately 9% motherhood penalty. The estimated penalty shrinks to less than 5% in countries where at least a third of this age group is enrolled.

Of course, other country characteristics may explain why motherhood penalties vary across countries. For example, countries with larger public sectors may offer more family friendly jobs and enforce family policies. Lower overall income inequality may likewise explain why earnings differences between mothers and childless women are smaller compared to countries with greater inequality.

However, our analyses show that the associations between policies and motherhood penalties hold, even when we take other country characteristics into account, including income inequality, the wealth of countries, size of the public sector, or women’s unemployment rates.

Our cross-national study suggests that governments can help mitigate the motherhood earnings penalty by implementing paid family leave and providing public support for (quality) childcare services. While very long leaves appear detrimental with regard to mothers’ wages, no paid leave at all, such as in the United States, is worse. Some states (e.g., Georgia) and cities in the U.S. have made significant advances in increasing the availability of public preschools. Other local governments have implemented paid leaves, most recently New York State and San Francisco.

Yet today, only 12% of private sector workers in the U.S. have access to employer-provided paid leave. At the same time, very few workers can rely on state subsidized childcare, leaving them to opt between high quality care (which can be prohibitively expensive) and unregulated care which may not provide the best environment for children, or quitting their jobs.

Adopting stronger work-family policies means investing in families with children. This will strengthen the economy, address wage inequalities, and ensure a brighter future for children.

Irene Boeckmann is a research fellow in the Inequality and Social Policy department at the WZB Berlin Social Science, Germany, and will be an Assistant Professor of Sociology at the University of Toronto beginning summer 2016. Joya Misra is a Professor of Sociology and Public Policy at the University of Massachusetts, Amherst. Michelle Budig is Chair and Professor of Sociology at the University of Massachusetts, Amherst.