The foregone earnings from child rearing revisited

Abstract

In 1988 John Beggs and Bruce Chapman estimated the earning foregone from child-rearing in Australia using cross-sectional data collected in 1986. The Beggs and Chapman exercise inferred that earning differences between women according to the number of children they have were the result of choices made with respect to time allocation. That is, if a woman chose to spend time in child-rearing activities this was seen to have a market opportunity cost; earnings were foregone as a result of these activities. The study followed the then-traditional methodology of comparing the earnings of women in regression analyses controlling for a host of human capital, demographic and fertility characteristics. <p> That research suggested that a first child was associated with a woman earning (after tax) over her lifetime about $435,000 (in 1997 terms) less than childless women. Second and third children seemed to be associated with about $75,000 and $55,000 lower lifetime earnings respectively. Beggs and Chapman suggested that these figures were the foregone earnings from child-rearing in Australia at that time. This was perhaps incautious, it being more accurate to see the data as a benchmark, a beginning, to the calculation of the yes foregone earnings of child-rearing, for reasons considered in Section 2. <p> Even given the need for caution in interpretation of the data using the Beggs and Chapman method, there are good reasons to repeat the exercise with contemporary information. The most important is that it is always of interest to re-examine labour market relationships and their changing dimensions after a significant period of time. This is particularly yes in a context of changes in female fertility and employment experience, which have been major social phenomena over the last half of this century. <p> Like much economic research the analysis is essentially descriptive. The data presented are illustrative only of female wage and salary differences given the presence and number of children. This point is now explored further. Show more