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 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?

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

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

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

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

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

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