How to Reduce the Child Penalty in Incomes After Women Give Birth

A new study by Emily Nix, an assistant professor of finance and business economics in the Marshall School of Business at the University of Southern California and Martin Eckhoff Andresen from Statistics Norway, finds that after giving birth women’s incomes on average drop significantly — by about 40 percent in the United States. And this so-called “child penalty” lingers for years. On average, new fathers experience no such hit to their earnings.

The researchers found that women in heterosexual couples see their pay shrink — whether due to staying home to care for the newborn, shifting to part-time work or other reasons. That drop persists for at least five years and likely longer. In same-sex couples, the birth mother’s income fell 13 percent after childbirth, along with a 5 percent drop for her partner. But within two years, the birth mother caught up with her partner. By four years after birth, the incomes of both mothers had fully recovered.

The researchers also found that subsidized high-quality child care reduces the child penalty by 25 percent. “It’s not going to totally close the gap,” Dr. Nix said, “but I would argue that 25 percent is much better than zero. It’s slow and steady, but it’s progress.”

The authors also found that paid paternity leave had no impact on the child penalty impacting women’s incomes after childbirth. “These results suggest that if policymakers wish to decrease the child penalty, they should focus on providing better child care to families,” the researchers wrote.

Dr. Nix joined the faculty at the University of Southern California in 2017 after conducting postdoctoral research at University College London. She is a graduate of the University of North Carolina at Chapel Hill, where she majored in mathematics and economics. Dr. Nix holds two master’s degrees and a Ph.D. in economics from Yale University.

The full study, “What Causes the Child Penalty and How Can It Be Reduced? Evidence from Same-Sex Couples and Policy Reforms,” can be accessed here.