Taking the long view: Long-term couple earnings arrangements across the transition to parenthood

Abstract

This paper examines household earnings arrangements and parenthood. Previous research has shown that parenthood is associated with a motherhood wage penalty with women withdrawing from the labour market or reducing their work hours. But few studies have examined within-couple relative earnings and breadwinning arrangements across the transition to parenthood. We identify three types of households—“female-breadwinner households” (where women earn more than 60 per cent of the couple's annual labour income); “male-breadwinner households” (where women earn less than 40 per cent of the joint income); and “equal-earner households” (where women earn 40 per cent to 60 per cent of the joint income). Using longitudinal data from the Household Income and Labour Dynamics in Australia (HILDA) Survey and fixed effects models, we find a substantial decrease in the percentage of couples in equal-earner households in the year prior to and after parenthood that is largely replaced by an increase in the percentage in male-breadwinner households. We observe little return to pre-parenthood earnings arrangements for equal-earner and male-breadwinner households. For female-breadwinner households, we observe a gradual return to pre-parenthood arrangements. These results provide evidence that parenthood is a major milestone contributing to gender inequality and highlight the importance of policies for reducing the impact of parenthood on women's earnings.