The Child Penalty – A Compensating Wage Differential? ENEPRI Research Reports No. 22, 22 August 2006

Many studies document that women with children tend to earn lower wages than women without children (a shortfall known as the ‘child penalty’ or ‘family gap’). Despite the existence of several hypotheses about the causes of the child penalty, much about the gap in wages remains unexplained. This study explores the premise that mothers might substitute income for advantageous, non-pecuniary job characteristics. More specifically, the hypothesis to be investigated is that if the labour market rewards working arrangements that involve disamenities, to some extent the child penalty might be a compensating wage differential for the disamenities avoided by mothers. In order to assess the impact of motherhood on the choice between pecuniary and non-pecuniary job features in Germany, data from the German Socio-Economic Panel (GSOEP) is used. The longitudinal nature of the data allows a comparison of working women before and after the birth of their first child. Furthermore, the GSOEP provides detailed information on personal attributes, job characteristics and job satisfaction, which enables the application of the following three steps to test the hypothesis. First, an event study is used to analyse the changes in the characteristics of a woman’s job around the birth of her first child. The features of interest are time, workload and flexibility. Second, job characteristics are included by their utility (proxied by job satisfaction) for a mother. Third, following the approach of hedonic wage regressions, these (dis)amenities are included in the wage regression in order to see whether a trade-off exists between pecuniary and non-pecuniary job characteristics. The results suggest that to some degree the child penalty can be interpreted as a compensating wage differential

The Willingness to Pay for Job Amenities: Evidence from Mothers' Return to Work

This study is the first to estimate mothers’ marginal willingness to pay (MWP) for job amenities directly. Its identification strategy relies on German maternity leave length. The key aspect of the maternal leave framework is that mothers can decide whether and when to return to their guaranteed job. Thus, in contrast to previous studies that analyze the job search of employed workers, this framework allows us to overcome the limitation of not observing the wage/amenity offer process. A theoretical model of the leave length decision is derived from a random utility approach. Using data from the German Socio-Economic Panel and the Qualification and Career Survey, this model is estimated by a discrete duration method. The MWP for amenities can be inferred through the estimated elasticities of the leave length with respect to the amenities and the wage. The results provide evidence that mothers are willing to sacrifice a significant fraction of their wage to reduce hazards (22%) and to enjoy a flexible working schedule (36-56%).marginal willingness to pay, maternal labor supply, discrete duration models

The Willingness to Pay for Job Amenities: Evidence from Mothers' Return to Work

This study is the first to estimate mothers' marginal willingness to pay (MWP) for job amenities directly. Its identification strategy relies on German maternity leave length. The key aspect of the maternal leave framework is that mothers can decide whether and when to return to their guaranteed job. Thus, in contrast to previous studies that analyze the job search of employed workers, this framework allows us to overcome the limitation of not observing the wage/amenity offer process. A theoretical model of the leave length decision is derived from a random utility approach. Using data from the German Socio-Economic Panel and the Qualification and Career Survey, this model is estimated by a discrete duration method. The MWP for amenities can be inferred through the estimated elasticities of the leave length with respect to the amenities and the wage. The results provide evidence that mothers are willing to sacrifice a significant fraction of their wage to reduce hazards (20%) and to enjoy a flexible working schedule (44-56%).Marginal Willingness to Pay, Maternal Labor Supply, Discrete Duration Models

The Effect of Maternal Work Conditions on Child Development

This study goes beyond the much-studied impact of mothers' labor force participation on children's development and investigates how mothers' working environment affects children's cognitive and non-cognitive performance. Using data from the Child Development Supplement of the Panel Study of Income Dynamics and the Occupational Information Network and applying a value added plus specification we find a negative impact of the hazards involved in mothers' jobs on their children’s non-cognitive achievement, but not on their cognitive performance. Nevertheless, stratification according to mothers' verbal skills reveals that only the personality development of children of mothers with high verbal skills is affected. Upon further investigation,we find that a possible mechanism through which maternal work conditions affect child outcomes is through reduced mother-child interactionsChild Development, Maternal Labor Supply, Occupational Disamenities

The tempest: Using a natural disaster to evaluate the link between wealth and child development

How does family wealth affect children's development in the short- and long-run? We address this question by exploiting a shock occurred to family’s real estate, i.e. housing damages caused by a super typhoon. Our identification strategy is based on a comparison of children, who all lived in the same local area and thus were confronted with the same macro-economic shock, but only some experienced housing damages. We present evidence in favor of housing damages being essentially a severe wealth shock, with no effects on other observable channels which might directly harm children’s development. The shock results in a decline of educa-tional investments, but not of health-related investments. We observe a deterioration of chil-dren’s educational achievements in the short-run and even more pronounced in the long-run. Our findings are mainly driven by children whose families are at the bottom of the wealth distribution or lack the support of a strong family network.Child development, wealth effects, natural disaster

Sport and Child Development

Despite the relevance of cognitive and non-cognitive skills for professional success, their formation is not yet fully understood. This study fills part of this gap by analyzing the role of sports club participation, one of the most popular extra-curricular activities, on children’s skill development. Our results indicate positive effects: school performance improves by 0.20 standard deviations and overall non-cognitive skills by 0.09 standard deviations. The results are robust when using alternative datasets as well as alternative estimation and identification strategies. The effects can be partially explained by increased physical activities replacing passive leisure activities.Skill formation, non-cognitive skills, physical activity, semi-parametric estimation

Sports and Child Development

Despite the relevance of cognitive and non-cognitive skills for professional success, their formation is not yet fully understood. This study fills part of this gap by analyzing the effect of sports club participation, one of the most popular extra-curricular activities, on children's skill development. Our results indicate positive effects: both cognitive skills, measured by school performance, and overall non-cognitive skills improve by 0.13 standard deviations. The results are robust when using alternative datasets as well as alternative estimation and identification strategies. The effects can be partially explained by increased physical activities replacing passive leisure activities.skill formation, non-cognitive skills, physical activity, semi-parametric estimation

Sports and Child Development

Despite the relevance of cognitive and non-cognitive skills for professional success, their formation is not yet fully understood. This study fills part of this gap by analyzing the effect of sports club participation, one of the most popular extra-curricular activities, on children’s skill development. Our results indicate positive effects: both cognitive skills, measured by school performance, and overall non-cognitive skills improve by 0.13 standard deviations. The results are robust when using alternative datasets as well as alternative estimation and identification strategies. The effects can be partially explained by increased physical activities replacing passive leisure activities.skill formation, non-cognitive skills, physical activity, semi-parametric estimation

The closer the sportier? Children's sport activity and their distance to sport facilities

We investigate whether the distance between the next sport facilities and children's homes matter for their sports activities inside and outside of sport clubs. Our analysis is based on a large and informative cross-section of individual data of children and their families, the so-called KIGGS data. We use a semiparametric econometric method to investigate this relationship empirically. Our results suggest that while the distance does not matter in larger towns and cities, it does matter in smaller towns and in particular on the countryside.Sport activities of children, KIGGS data, propensity score matching methods.