Estimating the effect of teenage motherhood on earnings in the long-term:Evidence from a cohort study

Teenage motherhood is seen as a trigger to lower social and economic achievements. Differences in long-term economic outcomes such as earnings of teenage mothers in comparison with nonteenage mothers has however been seldom studied and the causality link is not straightforward. In particular it is unclear whether teenage mothers would have been able to achieve better socioeconomic outcomes if they had not had a child in their teenage years. In this paper we use data from the 1970 British Cohort Study and we evaluate the effect of teenage motherhood on the hourly earnings at age 30, 34, 38 and 42 using alternative non-experimental estimation methods to control for possible biases including linear regression, matching methods, and Heckman sample selection models. Our findings confirm that teenage motherhood has a significant negative effect on hourly wages. Our preferred estimates show a wage loss between 30% and 12% when comparing teenage mothers with any other women in their generation and between 23% and 9% when comparing with women who delayed childbearing. When comparing to women who have not had any children, the pay penalty ranges between 39% and 29% over the four age points. The use of Heckman selection and matching methods to correct from selection into employment as well as into teenage parenthood allows us to correct estimates of the proportion of wage loss due to teen birth. We conclude that there is evidence of long-term scarring effects of teenage motherhood on earnings of women in the UK.