How a Child Leads to a Permanent Cut in the Mother's Salary

THE PHENOMENON IS KNOWN AS CHILD PENALTY AND QUANTIFIES THE LONGTERM COST THAT MOTHERS HAVE TO PAY 15 YEARS AFTER BIRTH IN TERMS OF LOST INCOME, EARNING 20% LESS THAN THE CHILD'S FATHER. THE STUDY ON THE CASE OF ITALY

by Alessandra Casarico, associate professor at Department of Social and political sciences

The birth of a child represents a turning point in women's working careers and is still one of the main factors contributing to the gender gap in employment and pay. The term child penalty is often used to indicate the cost of the birth of a child on the labor market. It measures the loss in terms of labor income that mothers suffer following the birth of a child when compared to the fathers, or with women without children who share the same characteristics, for example in terms of age, skills and wages. Even in Scandinavian countries, which usually excel in the international rankings on gender equality, mothers pay a long-term penalty (15 years after birth) of more than 20% in terms of lower earnings after birth with respect to fathers. In Austria, Germany, the United Kingdom, the United States and Spain, the income loss is even greater.
Italy is no exception. In a research work with Salvatore Lattanzio we obtained an estimate of the child penalty 15 years after the birth of the child based on a sample of INPS data on employees in the private sector between 1985 and 2018. We identified all instances of maternity leave and estimated the trajectories of the annual wages of the mothers in the five years preceding and in the fifteen following the year of the first leave. To understand the impact of motherhood, we compared them with the trajectories of wages of comparable childless female workers.

What we find is that 15 years after birth, mothers' annual wages rose 57% less than those of childless women. The collapse is very strong in the immediacy of birth, but the gap that opens then never really closes later in life. It is higher for female workers who take long-term leave, earn low wages, and less than 30 years old at the time of motherhood.
Why are female workers' incomes no longer aligned with those of non-mothers after maternity leaves? The result could depend on a change in the hours or weeks worked, or - for the same job offer - on lower weekly wages: mothers could move to companies that pay less, perhaps in exchange for greater flexibility or proximity to work, or alternatively, occupy less profitable professional positions within the same company. Our analysis shows that 68% of the child penalty is attributable to fewer weeks worked in a year. 20% is explained by the transition to part-time work schedule, while 12% is attributable to lower full-time equivalent weekly wages. It is therefore the reduction in the labor supply of mothers that largely contributes to the penalty in annual income. A penalty that does not consider the exit of mothers from the labor market: the overall measure of how much motherhood affects the female employment and earnings should also take into account that women with children have labor market exit rates that are 12% higher than non-mothers 15 years after birth.

The work income penalty linked to the birth of a child captures several aspects. It can reflect the preferences of mothers who wish to spend more time with their children and thus reduce the time spent at work. It can capture the difficulties of reconciling work and family duties in the absence of child nursery and day care services, or the lack of sharing the workload of child rearing within families. In fact, we find that the size of the penalty is greater in regions where the availability of child care services is less. It can point out stereotypes and social norms according to which mothers should be the mainly or solely responsible for the care of their children. Income loss relative to non-mothers, as well as transition to non-work are greatest in areas of the country where a more conservative gender culture prevails. Lastly, it may depend on the characteristics of the companies for which mothers work: female employment tends to be concentrated in companies that pay all workers less on average.