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Fatherhood pay bonus revealed

Despite the many advances made towards the removal of the gender pay gap, the decision to have a child can still have a significant impact on the wages of parents.

Recent analysis by think-tank the Institute for Public Policy Research (IPPR) has found that while the earnings prospects of women who postpone having children have improved, things have got worse for women who have children earlier.

Fathers are also subject to a change in their earnings prospects.

‘Motherhood pay penalty’

The IPPR analysed data about men and women born in 1958 and 1970, to assess what impact 50 years of feminism has had on the way we live today.

It found that mothers born in 1958 earned 14% less than they would have if they had not had children by the time they were 40, while mothers born in 1970 earned only 11% less.

Comparing mothers and fathers, mothers born in 1958 who had children by the time they were 40 earned 32% less than an average father born in the same year, compared to the 26% drop experienced by mothers born in 1970.

The IPPR points to international academic evidence suggesting that countries that idealise families in which the men go out to work and women stay at home have the strongest ‘motherhood pay penalty’.

‘Fatherhood pay bonus’

The IPPR’s analysis also revealed a previously unknown ‘fatherhood pay bonus’.

Put simply, fathers born in 1958 could expect to be earning 16% more by the age of 40 than if they decided not to have children, while those born in 1970 could expect an increase of almost 19%.

Why? Academic evidence suggests that there are a number of possible reasons, says the IPPR:

  • In some cases, men increase their earning capacity on becoming a father because of a sense of responsibility, and to compensate for their partners’ reduced earnings;
  • Other research suggests that fatherhood is valued by some employers because of the perceived loyalty it may bring; and
  • Other fathers wait to have children until they feel that they earn enough to support a family.

Earning prospects for mothers

The IPPR’s analysis shows that while the earnings prospects of women who postpone having children have improved, things have got worse for women who have children earlier.

Women born in 1958 who had their first child later (between the ages of 25 and 32) were likely to earn 12% less than women without children. For women born in 1970 this difference decreased to less than 10%.

Women born in 1958 who had their first child between 18-24 years of age were likely to earn 17% less than a woman without children. Those born in 1970 who had children at the same age were likely to earn 20% less than women without children.

Additional studies

The findings of the IPPR study are not unique. A recent report from the Organisation for Economic Co-operation and Development (OECD) found that women across OECD countries can pay a high price for becoming mothers.

The study found that women earn on average 16% less than men in similar full-time jobs. For women with at least one child, the average pay gap between men and women increases to 22%. For couples with no children, the pay gap is only 7%.

 

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