The report found that the “motherhood penalty” was due to a number of factors, including lower participation rates and reduced working hours and, to a lesser extent, a reduced hourly wage.
And it didn’t matter whether the mother was the breadwinner in the family, with the research showing that the decline in women’s earnings is similar regardless of their income status, which suggests that relative earnings prior to children have little influence over the intrahousehold allocation of paid work following children.
There was some good news from the report that found that women with greater access to flexible working conditions increased the likelihood of them remaining employed after having children.
The analysis on which the report was based used data from the Australian Taxation Office and the Melbourne Institute’s Household, Income and Labour Dynamics in Australia.
Researchers found that men’s and women’s earnings followed similar paths until parenthood, at which point their earnings begin to diverge.
When children arrived, women’s earnings reduced by around 55 per cent for the first five years of parenthood, while men’s remained relatively unchanged. Additionally, the report suggests that the motherhood penalty remains persistent for at least 10 years into parenthood.
The results found that the motherhood penalty for women who have only one child is smaller than the penalty estimated for multiple children but remains persistent. Importantly, for women with one child, there is no significant recovery in earnings at year five when children generally start school.
There were three contributing factors for the drop in wages, researchers found — employment, hours of work, and the hourly wage rate.
“There is a sharp drop in the probability of employment of about 45 per cent in the year the first child arrives, with only modest recovery after five years. For women who remain employed, hours worked falls by about 35 per cent across the first five years and does not significantly recover over this period,” the report stated.
“There is also some evidence that for women who remain employed, their hourly wages are about 5 per cent lower than if they had not had children.”
And the more educated women are, the larger the penalty, despite the higher opportunity cost of reducing their participation.
“Australia’s motherhood penalty has important implications for both gender equality and aggregate productivity,” the researchers stated.
“On average, Australian women are now more educated than Australian men — with 37 per cent of women attaining a bachelor’s degree or above in 2020, compared to only 29 per cent of men (Australian Bureau of Statistics 2020). Improving the utilisation of women’s skills would increase the returns on investments made in women’s human capital.”
