The Motherhood Wage Penalty Revisited: Experience, Heterogeneity, Work Effort and Work-Schedule Flexibility

Abstract

A wage penalty is regularly observed for working mothers. Reasons for this gap include reduced human capital, unobserved heterogeneity, and dissipation of energy leading to lower work effort and productivity. In this paper we use the NLSYW to revisit the motherhood wage penalty. Like other studies, we analyze how much of the penalty can be attributed to readily controlled human capital measures and individual heterogeneity. These controls reduce the observed penalty by 60 percent. We go further by also considering the role of sample composition, which changes as mothers of older children enter the work force, and by assessing whether the work-effort hypothesis can account for the portion of the penalty not explained by human capital and heterogeneity, using simple sample decomposition techniques. We find that wage penalties are not borne equally across all mothers. Mothers of infants and toddlers appear to bear the highest penalty. Nevertheless, college graduates face no penalty at all after work force absences are controlled. Nor do high school dropouts bear any penalty for their older children. High school graduates who never completed four years of college appear to bear all of the wage penalty for pre-school and school-age children. High school graduates who delay re-entry into the work force are particularly disadvantaged. We find that these patterns are not wholly consistent with a work-effort argument for the unexplained wage penalty. Instead, we offer an explanation based on the high costs of flexible work schedules for medium skill "office-hour" jobs.

JEL Classification: J12, J13, J31