Highly educated women lose most from having children

New research by economist Astrid Kunze shows that taking a few years off work results in bigger losses for highly educated women than for women with less education. She is critical of the cash benefit system.

20.12.2013 - Torill Sommerfelt Ervik

'We note that the pay level falls by around four per cent for all women when they return to work after having their first child. The loss is greater, however, for women with higher education,' says Associate Professor Astrid Kunze of the Department of Economics at NHH.

Together with Professor Mette Erjnæs at the University of Copenhagen, she has conducted research into what happens in the labour market when women become mothers. They have concentrated on women's first child, because the transition from no children to one child is probably greatest.

Big differences

Even though women in all educational groups lose out on becoming mothers, the researchers found a marked difference between women with higher education and women with little education.
'We find that the pay of women with higher education falls more than is the case for women with little education. The pay loss is 30 to 40 per cent greater,' Kunze says.

The study is based on data from Germany from the period 1975-2001 covering 30,000 women, who were monitored from their first job until they became mothers for the first time. There was great variation in the sample as regards how long the women had been in employment when they had their first child, how long they were away from the labour market after the birth, and whether they returned to the same job and the same percentage of full-time work.

While the women with little education experienced a loss in pay of 3.4 per cent for every year they were out of employment, the pay loss for women with intermediate level and higher education was between 4.4 and 5.8 per cent.

Even though the data are from Germany, Kunze believes that the study is also relevant in Norway.

'We are probably better at integrating mothers in the workplace and we have a more positive attitude to working mothers in Norway, but there is no reason to believe that we will not find the same tendency here at home,' she tells us.

Loss of human capital

Kunze assumes that the loss of pay is greatest for women with intermediate level or higher education because they lose more competence during their leave of absence than do women with less education.

'Education is an investment that yields a high return. The proportion of women in higher education has increased strongly in recent decades, and women's average pay has increased as a result. But if women want to get the full return, being away from work for a long time is problematic. Conditions in the workplace change quickly. Women who are away from their jobs for a whole year lose more human capital than women with little education and routine jobs,' she says.

This applies in particular to women in complex professions where the technology and the organisation can change a great deal during their period of maternity leave.

'When women return to work after a long absence, they are less productive and are therefore paid less. Even though their pay will gradually increase again, we note that it takes time to regain the level they had achieved before having an child. Companies face a challenge here in relation to developing incentives and offering models that enable women to combine a family and work,' she says.

Not profitable for society

Kunze thinks that the results of the study should be taken into consideration when family policy is formulated. Among other things, she believes that the authorities should be cautious about introducing overly generous leave arrangements.

­'Long leaves of absence provide an incentive to stay at home longer. The women who this mainly concerns are not necessarily aware of the consequences such leave will have. Every year that a woman is away from work means less pay when she returns,' she says.

One of the policies Kunze is sceptical about is the cash benefit, or 'cash for care', scheme.

'The cash benefit scheme has just been introduced in Germany, where it is very controversial. Why pay money to people who do not want to use kindergartens? I think that the cash benefit system steals resources that are needed to expand kindergarten provision,' she tells us.

In addition to the women themselves losing out on being away from employment for lengthy periods, it is not profitable for society either.

'Society invests in educating women and men through the tax system. We want to see a return on this investment. If one year leads to such a big loss, the benefit of the whole education can be lost after six years. That gives rise to costs for society. If women's productivity is reduced so much after giving birth, we as a society must ask ourselves what it is we want. Are we so rich that we can afford this?' she asks.