Working paper number:2021-68
Paper Abstract:Couples’ earnings equality declines substantially following a first birth, when time commitments at home and on the labor market diverge. In the context of broad increases in gender equality and growing socioeconomic disparities along various dimensions of family life, we examine changes in within-family earnings equality following parenthood and the extent to which they have played out differently by mothers’ education. Our analysis relies on links between rich surveys and administrative tax records that provide high quality earnings data for husbands and wives spanning two years before and up to 10 years following cohorts of first births from the 1980s to the 2000s (Survey of Income and Program Participation Synthetic Beta files; N =131,400 married couples and 21,300 first birth transitions). We find that wives’ share of couple earnings declined after parenthood, changes were relatively modest over time, and these were mostly concentrated among the earliest cohort of parents. The magnitude of decline in her earnings share was substantial, dropping 13 percentage points following first birth in the 1980s and 10 percentage points in the 2000s, after accounting for time-invariant couple characteristics and year and age fixed effects. We find few differences in her earnings share changes over time by mother’s education, and we identify mothers’ employment as a key mechanism of change across education groups. Wives’ financial dependence on their husbands increases substantially after parenthood, irrespective of education and cohort, with implications for women’s vulnerability, particularly in the U.S. where divorce remains common and public support for families is weak.