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The Economic Consequences of the Transition into Parenthood

The Economic Consequences of the Transition into Parenthood. Wendy Sigle-Rushton Paper presented at the GeNet Seminar: Low Fertility in Industrialised Countries London School of Economics 31 May 2007. Background. Parenthood is economically costly

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The Economic Consequences of the Transition into Parenthood

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  1. The Economic Consequences of the Transition into Parenthood Wendy Sigle-Rushton Paper presented at the GeNet Seminar: Low Fertility in Industrialised Countries London School of Economics 31 May 2007

  2. Background • Parenthood is economically costly • Mothers’ labour market activity is often lower • Short term reduction in income • Longer term effects • But fathers’ labour market activity may change • Increase work or work harder • Costs are likely to differ cross-nationally • Female employment and labour market behaviour of mothers • Generosity of parental leave and other child benefits • Tax and benefit systems treatment of families/spouses • Household composition of families with children • Selection bias?

  3. Data • Six ECHP countries: the Netherlands, France Germany, United Kingdom, Italy, Spain • Sample: • Women aged up to 30 years in 1994 • Childless in 1994 or first year observed in the data • Followed for at least two periods

  4. Models • Dependent variables • Net equivilised household income (natural log) • Indicator of poverty • Control variables • Age, education, household structure • Parity and time since last birth • Parameters differ by age at first birth • 23 years and younger, 24-29, 30+ • Woman-specific fixed effect (household income) • Indicator for being a mother for the period observed in the data (poverty) • Not significant for any specification • Lagged dependent variable

  5. Results – Net Equivilised Household Income by Country and Age at First Birth

  6. Results – Odds Ratios for Poverty by Country and Age at First Birth

  7. Percent Change in Income: One Birth at Time t or Two Births, One at Time t and a Second at t+2

  8. Conclusions • Little evidence of selection into parenthood in any of the countries studied • Significant declines in income amongst parents • Especially large in the Netherlands • Smaller in Italy and France • Increased risk of poverty, particularly for higher order births among young first mothers • Differences across countries larger than differences by age at first birth

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