Understanding the Returns to Delayed Childbearing for Working Women

Abstract

Since women began entering the workforce in large numbers in the latter half of the twen? tieth century, they have faced important and difficult trade-offs between family and work. One such trade-off involves the timing of fer? tility. Biological constraints such as declining fecundity by age encourage early childbearing. However, researchers have found evidence of a wage premium to delay. Amalia Miller (2007) uses miscarriages as a source of variation in the timing of first birth, and finds an additional year of delay is associated with a 3 percent increase in wage rates and a 10 percent increase in earnings. David Ellwood, Ty Wilde, and Lily Batchelder (2004) show that wage profiles for high-skilled women flatten out at the point of the first birth, resulting in' significantly greater lifetime earn? ing for delayers.1 Understanding the causes of this wage pre? mium is essential to understanding the choices working women face and the decisions they make. This paper examines how much of the delay premium can be explained by differ? ences in human capital among early and late child bearers. Using data from the National Longitudinal Survey of Youth (NLSY), I find a raw return of approximately 3 percent per year of delay for hourly wages in 2003. Using the full NLSY panel and a fixed-effects framework, I show that there is a wage penalty to motherhood that increases with time since the birth, and that these penalties are greatest for high-skilled women. However, this effect is attenuated for women who delay childbirth. Next, I show that there are significant differ? ences in women's observable characteristics by age at first birth. Women who delay are more skilled, more educated, more likely to be in pro? fessional or managerial careers, and have more experience?even conditional on completed fer? tility. I return to estimating the return to delay, adjusting wages for differences in observable characteristics. I find that as much as 90 percent of the return to delay can be explained by differ? ences in observable characteristics. Education, experience, and age at first marriage have the most explanatory power. These results support a human capital theory for the delay premium.

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