Parenthood, earnings, and the relevance of family formation sequences

Abstract

Prior research sheds little light on how shifts in family formation trajectories have implications for recent cohorts' earnings gains and losses with childbearing. Using longitudinal data from a contemporary cohort, we examine how the pay premium or penalty for parents varies by their relationship status at childbirth and subsequent changes in the status. Fixed effects models show that children born to unpartnered women are associated with substantial pay penalties for the mothers. Conversely, women giving birth within cohabiting or marital unions experience small or no motherhood penalties. For residential fathers, only children born after marriage are linked to pay increases. Men having children while cohabiting or unpartnered receive no fatherhood premiums even if they later transition into marriage. Married mothers' earnings outcomes also depend on their sequence of marriage and childbearing. Whereas women bearing children before marriage encounter a substantial motherhood penalty, those doing so after marriage face none. The variation in parenthood penalties or premiums by childbearing context cannot be entirely elucidated by the differences in the age of entering parenthood, ethnoracial composition, education, or pre-parenthood earnings growth rate among people having children in various contexts. We suggest that the family formation sequence is related to individuals’ expectations and the support they receive for their parental roles, which shape parenthood earnings outcomes.