17.05.2018 | MICHAEL SCHRØDER
In the short term, the annual earnings of Danish mothers decrease by an average of DKK 70,000 after they give birth to their first child.
The main reason is that the mothers work fewer hours due to e.g. maternity leave both before and after they give birth. However, although the mothers go back to working longer hours later, their salary level only partly catches up. Thus, the long-term salary decrease is DKK 30,000 a year on average.
This is the result of a new analysis in which researchers from Aarhus BSS, Lund University and the University of Amsterdam are the first to demonstrate a direct, negative correlation between women’s earnings and having children.
In the research article ”Can Women Have Children and a Career? IV Evidence from IVF Treatments”, published in The American Economic Review, the researchers thus introduce a new so-called IV strategy (Instrumental Variable Strategy).
“The study doesn’t tell us anything about the reasons for the salary decrease, but we are now able to prove that there is a direct causal relationship between having children and the subsequent decrease in women’s salary,” says Associate Professor Astrid Würtz Rasmussen, the Department of Economics and Business Economics at Aarhus BSS.
She has conducted the study together with Professor Petter Lundborg, Lund University, and Professor Erik Plug, University of Amsterdam.
"We are now able to prove that there is a direct causal relationship between having children and the subsequent decrease in women’s salary late."
Astrid Würtz Rasmussen, Associate Professor
So far, women’s different starting points when they have children have made it impossible to demonstrate a direct correlation between salary development and having a child.
The women might have children already, they might have chosen not to have children or to have children later in life. All of these factors make the starting point for women very different, and thus there will be many different reasons for the women’s salary development.
By mapping out the labour market conditions for the childless women who underwent IVF treatment (in vitro fertilization) in Denmark between 1995-2005, the researchers have developed a framework for the analysis in which all women have an identical starting point. The desire to have their first child within the foreseeable future is thus a factor that is independent of the women’s position on the labour market. This allows for comparable data that can be checked for a variety of demographic variables such as age and education. The data can also be analysed according to labour market variables such as employment, position, working hours, hourly salary and annual income.
The Danish IVF register contains data on 31,166 women who underwent fertility treatment between 1995-2005. They received a total of 96,807 treatments. In fact, it is perfectly normal that women must undergo multiple treatments before achieving the desired result: Pregnancy.
But not everyone.
The researchers compared variables in the group of women who fell pregnant after the very first IVF treatment with the group of women who underwent more treatments or subsequently discontinued the treatment. In this way, the researchers could get a clear idea of what having your first child means for the career and earnings of the mothers-to-be.
The researchers also compared the women with a representative selection of women in Denmark (a total of 103,826) who gave birth to their first child during the same period.
A total of 18,538 women in the IVF register matched the criteria listed for the analysis. 5,370 of these women fell pregnant after the very first treatment, while 13,168 women had to receive multiple treatments or subsequently chose to discontinue the treatment.
Among other things, the analysis shows that:
Women who undergo IVF treatment are older, better educated and thus also better paid than women in the representative sample.
Women who fall pregnant after the first IVF treatment are on average one year younger than women who need multiple IVF treatments to become pregnant.
Before the treatment, the women who fell pregnant after the first IVF treatment and the women who needed multiple treatments were remarkably similar in terms of labour market variables such as educational level and annual income.
However, after the first treatment, the two groups of IVF treated woman turn out to be systematically different. Women who fall pregnant after the first treatment work fewer hours, earn less and are more likely not to work.
The decrease in working hours for women who fall pregnant after the first treatment typically lasts three or four years after the child is born. Afterwards, the mothers’ working hours increase to the same level as the other women.
The salary decrease for women who fall pregnant after the first treatment is most significant in the first two years after the child is born. But the difference in salary compared to other women is still significant when the child is about ten years old.
“This shows that women continue to make less money simply because they have had a child. All in all, our analyses show that when the child is young, the women earn less because they work less. When the child is older, the women earn less because they get a lower salary,” says Astrid Würtz Rasmussen.
The researchers are not able to pinpoint the reason for why this is so. However, their analysis of the demographic and labour market conditions points towards possible explanations.
“We see that initially the geographical distance to the workplace increases - most likely because the family moves house. With time, however, the distance decreases because the mothers get a new job closer to home. These job changes result in a lower income as mothers often change to a lower paid job. Something indicates that the mothers prioritise a shorter distance to work over salary,” says Astrid Würtz Rasmussen.
Read the research article "Can Women Have Children and a Career? IV Evidence from IVF Treatments” (American Economic Review).
Read more about the researcher: Associate Professor Astrid Würtz Rasmussen