Labor force experience and earnings: Women with children

Abstract

Married women with children are observed to earn less than men, and less also than women without children. Differences in the hourly wage rates of individuals of the same age and with the same educational attainment may reflect, in part, differences in labor force experience. While interruption in the work experience of women is recognized as an important cause of lower current wage rates, less attention has been directed to the impact of child-related reductions in hours worked when women are in the labor force. This paper examines the impact of hours worked in all past periods on the current wage rate. Our model, in which the ‘intensity’ of an individual's work experience in any period can vary from 0 (no work) to 100% (full-time work), is contrasted with the standard human capital earnings function, in which intensity is assumed to be 100% in every period subsequent to the completion of school. Using a new data set, both models are estimated for a sample of working mothers. Contrasting the wages of the women in this sample with the wages of their husbands, we find that differences in the intensity of prior work experience account for approximately half of the observed sex-related wage gap.