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New Estimates of Mothers’ Forgone Earnings Using HILDA Data

Author

Listed:
  • Trevor Breusch

    (Australian National University)

  • Edith Gray

    (Australian National University)

Abstract

Women who have children miss out on potential earnings. This happens through a combination of time out of the labour force, reduced working hours and lower paying jobs. We examine mothers' forgone earnings using HILDA 2001 data and find substantial effects, which vary with the woman's education and number of children. At a middle level of education (completed year 12 only), women forgo around 31 per cent of lifetime potential income for a first child, an additional 13 per cent for a second child, and a further 9 per cent for a third child. More highly educated women lose less proportionally than the less educated, although their dollar amounts of forgone earnings are higher. There is evidence, in comparison with previous studies, that the proportions forgone are falling with time, but more clearly so for women with higher education. We also find that women who delay motherhood maintain slightly more earnings than early childbearers.

Suggested Citation

  • Trevor Breusch & Edith Gray, 2004. "New Estimates of Mothers’ Forgone Earnings Using HILDA Data," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 7(2), pages 125-150, June.
    • Handle: RePEc:ozl:journl:v:7:y:2004:i:2:p:125-150
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    References listed on IDEAS

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    1. Jacob Mincer & Haim Ofek, 1982. "Interrupted Work Careers: Depreciation and Restoration of Human Capital," Journal of Human Resources, University of Wisconsin Press, vol. 17(1), pages 3-24.
    2. Mark Wooden & Simon Freidin & Nicole Watson, 2002. "The Household, Income and Labour Dynamics in Australia (HILDA)Survey: Wave 1," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 339-348, September.
    3. Bruce Chapman & Yvonne Dunlop & Matthew Gray & Amy Liu & Deborah Mitchell, 2001. "The Impact of Children on the Lifetime Earnings of Australian Women: Evidence from the 1990s," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 34(4), pages 373-389, December.
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    Cited by:

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    2. B.D. McCullough & Kerry Anne McGeary & Teresa D. Harrison, 2008. "Do economics journal archives promote replicable research?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(4), pages 1406-1420, November.
    3. Nick Parr, 2011. "The contribution of increases in family benefits to Australia’s early 21st-century fertility increase: An empirical analysis," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 25(6), pages 215-244.
    4. Peng Yu, 2006. "Higher Education, the Bane of Fertility? An investigation with the HILDA Survey," CEPR Discussion Papers 512, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    5. Gaitz, Jason & Schurer, Stefanie, 2017. "Bonus Skills: Examining the Effect of an Unconditional Cash Transfer on Child Human Capital Formation," IZA Discussion Papers 10525, Institute of Labor Economics (IZA).
    6. Julie Moschion, 2013. "The Impact of Fertility on Mothers' Labour Supply in Australia: Evidence from Exogenous Variation in Family Size," The Economic Record, The Economic Society of Australia, vol. 89(286), pages 319-338, September.
    7. Robert Fenge & Jakob von Weizsäcker, 2006. ""Generation Enkellos" und Rentenbeitragsrabatt für Eltern," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 59(05), pages 11-18, March.
    8. Xiaodong Gong & Robert Breunig, 2017. "Childcare Assistance: Are Subsidies or Tax Credits Better?," Fiscal Studies, Institute for Fiscal Studies, vol. 38, pages 7-48, March.
    9. Xiaodong Gong & Robert Breuing, 2011. "Estimating Net Child Care Price Elasticities of Partnered Women With Pre-School Children Using a Discrete Structural Labour Supply-Child Care Model," CEPR Discussion Papers 653, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    10. Nick Parr, 2010. "Childlessness Among Men in Australia," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 29(3), pages 319-338, June.
    11. Belinda Hewitt, 2021. "The Dynamics of Family Formation and Dissolution," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(4), pages 506-517, December.
    12. Matthew Gray & Lixia Qu, 2006. "Changes in the Labour Force Status of Lone and Couple Australian Mothers, 1983-2005," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 9(4), pages 395-416, December.
    13. Nick Parr, 2010. "Satisfaction with life as an antecedent of fertility," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 22(21), pages 635-662.
    14. Ester Lazzari, 2021. "Changing trends between education, childlessness and completed fertility: a cohort analysis of Australian women born in 1952–1971," Journal of Population Research, Springer, vol. 38(4), pages 417-441, December.
    15. Siobhan Austen & Jaslin Kalsi & Astghik Mavisakalyan, 2023. "Parenthood and the distribution of intra-household inequalities in wellbeing," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(2), pages 405-440, June.
    16. Julie Smith, 2007. "Time Use Among new mothers, the Economic Value of Unpaid Care work and gender aspects of superannuation tax concessions," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 10(2), pages 99-114.

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    More about this item

    Keywords

    Marriage; Marital Dissolution; Family Structure Time Allocation and Labour supply Value of Life; Foregone Income;
    All these keywords.

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

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