Tuesday, January 17, 2006

More Money for Later Moms?

University of Virginia economist Amalia Miller has made a small stir recently with her finding that women who delay having kids past their twenties make more money. The headline finding was that a year of delayed fertility leads to
• a 10% increase in career earnings,
• a 5% increase in career work experience, and
• a 3% increase in career average wage rate.

This finding has been troubling because it runs up against the fact that women’s fertility falls off significantly after their twenties.

SO, if a women wants to have kids, she should start having them before 30; if she wants to make money, she should have them after 30. Or not at all.

On the face of it, this is not an unreasonable conclusion. Kids cost money, both in direct costs and in the opportunities to make money that parents, especially moms, forego. You might see this as a tragic choice, or a choice between two different values.

I do see one problem with Miller’s account that I find troubling, though. She lumps together college graduates with graduate degree holders. Yet women pursuing graduate degrees would be more likely to be in school still in their mid-twenties, and would likely have higher earnings no matter what their fertility choices. Since the biggest returns come to managerial and professional women, this is the group in which the effect of delayed fertility for schooling and earnings affected by schooling should be greatest.

In other words, women with graduate and, especially, professional degrees are likely to make more in the long run anyway, regardless of whether they have kids or not. As a group, they are more likely to have kids later than other women. They skew the whole pool. It could be that they make more because they delayed starting motherhood. More likely, though, they make more because they trained for more lucrative professions. One side effect of their training was that they are less likely to have kids in their twenties.

Now women with graduate and professional degrees often do make a choice for career over children, sometimes by just waiting too long to start on kids. As I have lamented elsewhere, most women with Ph. D.s do not have any children. Some do it for the money, some for the career itself. I think that for most of the high-earning/low-momming women, though, they did not so much make a choice as make a “creeping non-choice,” and then live with the results. The evidence convinces me that most women do not pick their careers primarily to maximize lifetime earnings. People who do that are more likely to be men. Or economists.


SPorcupine said...

Did Miller control for how long women worked part-time or not at all after children were born? I tried to figure that out myself, and I don't think she did, but the report is just technical enough that I'm not sure.

If that variable wasn't considered, then the great income drop off is definitely not settled just by having kids. It's decided by many choices made over years: do I go back to work? What kind of job? What commute? How many hours a day?

To me, the decision-making looks like choices, and I'm happy with mine. After all, an expert once pointed out that each of my children is worth the gross domestic product of the Western Hemisphere, so I'm actually insanely wealthy no matter what the bank thinks.

Anonymous said...

The research merely restates the obvious. It has long been well known that women who delay marriage and childbearing generally have higher levels of income and education. In fact, childless women of the same educational level and work levels (hours) as men, have essentially achieved parity with men of the same description, despite the dramatic appeal of the "earnings gap".

It is unknown why this would create a stir, unless among those who make a career out of conjuring sinister male consipracy theories of wage discrimination. Whether the data lumps together grads vs non-grads, the general pattern is the same: marriage and childbearing are the most significant factors. It comes down to choices women make. This of course is not as dramatic as yet more preening by assorted activists or yet another media exercise condemining the sinister "earnings gap". As you say "The evidence convinces me that most women do not pick their careers primarily to maximize lifetime earnings.."

Exactly. It comes down to choice, undramatic as this may be.

Anonymous said...

I don't think older moms pick when to have kids based on their savings account balance, either. I can't think of one woman I know who considered giving up her career when the kids came -- they figured they would find child care and have everything. Speaking as one who knows one . . .

Charlotte said...

Is there a comparable study for men? My thought is that the people who make the most money are the ones to whom either money or ambition (or a combination) IS the top priority.I'm sure there are plenty of men in the current generation who are going to earn less money over the years than other men of comparable ability and education simply because they have made a choice to be fully-engaged with their families, or or because they aren't interested in relocating, commuting long distances or being workaholics. Money is only one measure of success. Also women don't have parity in heart attacks or ulcers or jail sentences, and they live longer.

Gruntled said...

Reading these comments leads me to a stronger conclusion than I had before: women, as a rule, choose their level of earnings, once they reach a comfortable level, based on what their family's need. Men, on the other hand, are more likely to seek more as a security measure. Even the men's motivation, though, is usually driven by whether they have dependents or not.

The economist's graph is good at measuring secondary values, but not primary ones, like spouse and kids.

Anonymous said...

If your going to bring children into this world, you should be staying home raising them.

Motherhood isn't for everyone, and it's sad when I see women who feel obligated to have a child and then just dump them into a daycare.

In the long run the child will have a much better long term effect on their future if they are home with the mother AND THAT SHOULD BE THE MOST IMPORTANT FACT TO YOU and if it's not then please don't bring children in this world. Your income is NOTHING compared to the time of being with that precious little child.