The Baby Penalty?

The source: “Understanding the Returns to Delayed Childbearing for Working Women” by Kasey Buckles, and “Transitions: Career and Family Life Cycles of the Educational Elite” by Claudia Goldin and Lawrence F. Katz, in ___The American Economic Review___, May ­2008.

Why have women not risen further and faster in business since pouring into the work force in the 1970s? It remains a great conundrum of the 21st century, and now two studies present new evidence on the familiar tension between family and ­work.

The wages of highly skilled women flatten out when they have their first child and never regain the same trajectory, according to Kasey Buckles, an economist at Notre Dame University. Although female fertility declines drama­tically between the ages of 25 and 35, the typical American woman is increasingly putting off having her first baby. The ­first-­time mother was almost two years older in 1999 than in 1982 (and since Buckles conducted her research, the mean age at first birth has risen further, to 25.2 years in 2005, the latest year for which figures are avail­able). Each additional year of delay is assoc­iated with a three percent increase in wage rates and a 10 percent increase in ­earnings.

Highly educated women delay childbirth longer than those without as much schooling, Buckles writes, and face greater wage losses if they don’t. National surveys show that skilled women who give birth before age 26 experience a “wage penalty” (compared with women who bear children later) of almost 19 percent in the first four years after the birth, 33 percent in years five through nine, and 62 percent 18 years ­later.

A separate study of male and female Harvard and Radcliffe graduates during three periods, roughly around 1970, 1980, and 1990, shows that women increasingly delayed marriage as the decades progressed, and nearly 40 percent of women in all three groups never had children at all. The first cohort married earlier than the others (average age 27, compared with age 30 for the most recent), but put off having children until they were 31 or 32 years ­old—­the same age as the more recent graduates. The 1970- and 1980-era female graduates took about a year off during the first 15 years after graduation if they had one child. The younger, ­1990-­era mothers settled for only nine months. The percentage of women who did not work outside the home stayed roughly the same—9 percent among the 1970-era grads, 10.5 percent among the 1980-era group, and 10.1 percent in the ­1990-era cohorts.

Recent speculation that women graduating from elite universities are “wasting resources by drop­ping out of the labor force” does not appear supported by the data, write Claudia Goldin and Lawrence F. Katz, both Harvard economists. What is true, they write, is that there is a wage gap. The median income of fully employed Harvard-educated women in 2005 was $112,500, of men, $187,500. Even when education (economics majors tend to be the best paid), time out of work, and occupation (business produces the most astronomical salaries) are accounted for, Goldin and Katz conclude that there is still a “gap of substantial magnitude.”