The Mommy Effect: Do Women Anticipate the Employment Effects of Motherhood? (NBER Study)

[Kirblar]

Fantastic study looking at how younger women's expectations of the amount of time available for work have changed over generations. The researchers went into this looking to see if younger women were underestimating the impact of motherhood when it came to their career. And when they looked at the data, they found they were, and that the effect was particularly strong among educated women. They also found both that this perception difference was a shift from ealier generations, where women had over-estimate the impact of motherhood on their career/work prospects, and that a large part of this perception gap was likely due to the marginal costs of motherhood (i.e., the salary you're giving up and/or the requirements of being a mother) having unexpectedly gone up over the decades involved.

There's also a fascinating part in the conclusion (unless it's been removed in the final paper) which offers the suggestion that this divergence in expectations vs actual results may be linked to women's gains in education attainment not translating 1:1 with labor market gains.

http://www.nber.org/papers/w24740 - Full gated link

https://aasle.conference-services.net/resources/2395/5355/pdf/AASLE2017_0200.pdf - Working version of the paper from last year

After decades of convergence, the gender gap in employment outcomes has recently plateaued in many rich countries, despite the fact that women have increased their investment in human capital over this period. We propose a hypothesis to reconcile these two trends: that when they are making key human capital decisions, women in modern cohorts underestimate the impact of motherhood on their future labor supply. Using an event-study framework, we show substantial and persistent employment effects of motherhood in U.K. and U.S. data. We then provide evidence that women do not anticipate these effects. Upon becoming parents, women (and especially more educated women) adopt more negative views toward female employment (e.g., they are more likely to say that women working hurts family life), suggesting that motherhood serves as an information shock to their beliefs. Women on average (and, again, more educated women in particular) report that parenthood is harder than they expected. We then look at longer horizons—are young women's expectations about future labor supply correct when they make their key educational decisions? In fact, female high school seniors are increasingly and substantially overestimating the likelihood they will be in the labor market in their thirties, a sharp reversal from previous cohorts who substantially underestimated their future labor supply. Finally, we specify a model of women's choice of educational investment in the face of uncertain employment costs of motherhood, which demonstrates that our results can be reconciled only if these costs increased unexpectedly across generations. We end by documenting a collage of empirical evidence consistent with such a trend.

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Part of the conclusion, from the sample paper-

That women do not appear to fully anticipate the employment effects of motherhood has important implications for understanding education decisions, occupational choice, and dynamic labor supply and savings. In particular, in most dynamic models of fertility and labor supply, women's preferences are fixed and they are assumed to be able to perfectly forecast the costs of motherhood and childcare. Recent models that endogenize education to fertility decisions also assume perfect foresight of childcare costs. Our results question the validity of these assumptions and raise the question of how these models can accommodate relaxing the assumption of fixed preferences and the (systematic) lack of anticipation of the costs of motherhood.

Our findings also provide an alternative resolution to the puzzle of why women continue to make rapid gains in human capital investment relative to men in spite of their apparent stalled progress in the labor market. To the extent that before they become mothers, women expect that they will continue to have high labor market attachment after motherhood, they will make their education decisions on the basis of these potentially erroneous beliefs, resulting in some degree of "over-investment" in education (at least from the point of view of the human capital model). While there may be other sources of non-labor market returns to education, the failure to correctly anticipate the employment effects of motherhood provides an alternative, though not mutually exclusive, explanation of the puzzling decoupling of women's educational gains and labor market progress.

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