To Grandmother's House We Go: An Empirical Analysis of Family Provided Childcare and The Motherhood Wage Penalty

Abstract

Nearly fifty years after the women’s liberation movement of the 1970s, women now have access to the same education and employment opportunities as their male counterparts. However, this shift in equality and opportunity is only partially reflected in the data. Women still make roughly 79% on average of what their male counterparts make. One reason for this is the motherhood wage penalty, which comes from considerable empirical evidence that indicates a negative relationship between children and women’s wages. It is unclear whether this negative relationship comes from preference and choice to forgo work and pursue childcare, or if the cost of childcare is too high a barrier for women to overcome and pursue work while their children are young. I employ family provided childcare as a proxy for free or subsidized childcare access. I then analyze the relationship between childcare access and women’s labor force participation and earnings over the course of her child’s lifetime via an ordinary least squares model. My results suggest that mothers who rely on family provided childcare when their children are between the ages of one and three are expected to have higher income growth over their child’s development to adulthood than their counterparts who rely on paid childcare.