Economics Thesis Spotlight: Alexa Rasmussen ’21

Name: Alexa Rasmussen ’21

Majors: Philosophy and Economics

Faculty mentor: Steve DeLoach, Martha and Spencer Love Professor

Title of research:

Is Having a Child Damaging to a Woman’s Earning Potential? A Regression-Based Analysis of the Motherhood Wage Penalty

Abstract:

The motherhood penalty was a term coined by sociologists to explain the phenomena of women entering the workforce as mothers and experiencing systematic disadvantages in pay, perceived incompetence, and receiving fewer benefits relative to childless women, on average. A wage penalty for mothers holds the potential to produce numerous adverse consequences for women, such as exacerbating gender inequality and allowing discrimination to continue infiltrating the labor force.

In analyzing the motherhood penalty through a regression-based analysis, this research ultimately aims to answer the question: Do young women who want to maximize their utility in the labor market through making the highest possible income have to choose between their career and bearing children?

To answer this question, I extracted data from the National Longitudinal Survey of Youth and use 1979- 2000 as the timeframe analyzed. A nationally representative dataset, the NLSY79 provides panel data originating in 1997 and follows 12,686 young men and women between the ages of 14-22 in the United States over an extended period. Restricting my sample to only include women employed full-time, I will run both Fixed-Effects Models and 2-Stage Least Squares models to analyze the motherhood penalty.

My goal is to see how large the penalty for mothers is per child, how long this penalty lasts, and how this penalty varies by educational attainment and industries. Thus far, my analysis has found that women face a wage penalty of -12.5% for the first child, relative to childless women, all else equal. When looking at highly educated women, defined as at least two years of college, the wage penalty increases to -16.9%. My research concludes that women who have children face a wage penalty, and the penalty is higher for educated women.

In other words:

The United States is still one of the only developed countries to not have some type of paid family leave policy to help parents balance work and family life demands. This research aims to display how damaging it is to maintain the normative expectations that women should take on the primary responsibility of childbearing, specifically looking at women’s earning potential is reduced, while the same does not hold for men or childless women. Women should still be allowed to consider themselves career-oriented, and not have to sacrifice the opportunity of having children to do. This research points to an intense need for the United States, if we ever hope to close the gender wage gap, to come up with some type of paid leave for both mothers and fathers.

Explanation of study/potential impact of findings:

We can’t ask women to choose between having kids and maximizing their earning potential, and right now, that is what we are doing in the United States labor force. Ultimately, this research has shown that mothers experience a negative impact on their earnings through having children in comparison to childless women. Furthermore, the empirical results in this paper have supported the idea there is a motherhood penalty in the United States labor force, and that there is a fatherhood bonus.

The consequences of this gender inequity in our labor force are significant and are important to continue studying, understanding, and working to change. As stated previously, we must challenge all norms, even those that seem fundamental to our world. It is only through questioning the normative expectations of maternity that we will find success in combating the gendered-power relations that continue to allow the family wage gap to persist. Our society should be analyzing and countering the conditions that allow for a gender wage gap to occur, rather than believing, let alone accepting, that unpaid maternity leave is the only solution.

Why did you pick this topic?

I picked this topic because I saw the senior thesis as an opportunity to use my economics degree to analyze issues around diversity, equity, and inclusion and understand how using economics can help identify the issues we need to resolve in these areas. I have always been very passionate about feminist studies and how to fight for gender equality, and I felt confused about how we can have laws mandating equal rights for women and men, yet still see a gender wage gap in 2021.

When I read an article in the New York Times that said that the persistence of the gender wage gap was likely attributed to parenthood, I instantly wanted to learn more. As a well-educated female going into the beginning years of my participation in the labor force, I am at a point in my life where I have to think a lot about my career and how to create success for myself. While I have always assumed I would eventually have children of my own one day, this research has taught me about the questions we should be asking before we jump into raising children.

I believe that if we continue to allow women to see a reduction in their earnings for having children, then we also allow the continuation of the devaluation of female labor. We can’t claim to have gender equality if we don’t look further into these questions and ask how to resolve them.

How has your mentor impacted you and your research process?

You never really know when someone is going to come into your life and completely change how to perceive your life trajectory to go. Before I took Econometrics with Dr. DeLoach my junior year, I was on a pre-law track, and fully intended on going to law school after I graduated from Elon. As soon as I got to Econometrics, I was intimidated by the complexity of the course curriculum and had to frequently attend office hours with Dr. DeLoach to get my head around it. It was in these moments where Dr. DeLoach transformed how I saw what I could do my Economics degree.

Dr. DeLoach consistently shared his time with me to make sure I fully understood what I was learning, and how this material transferred to realistic application. When the course ended, I no longer viewed law school as my direct route after Elon, but rather, I wanted more economics. When I informed Dr. DeLoach about this, he allowed me to continue learning under him by hiring me to be his research assistant for the summer. This work ultimately solidified that I wanted to go into Economic Consulting, where I could use my understanding of economics to make positive social change through policy analysis and market evaluation. This research also equipped me well for my senior thesis.

I feel as though Dr. DeLoach played a pivotal role in my senior thesis in that he never made it feel like a burden or an extra step that had to be done in order to graduate. Rather, his mentorship allowed me to perceive my senior thesis as a great learning opportunity and a chance to use my acquired skills to dig deeper into something I really cared about. I am forever grateful to have learned under Dr. DeLoach, and I hope that other students also have the opportunity to experience such incredible mentorship, as I know the lasting impact that it can have on a student.

Alexa Rasmussen presented her senior thesis at the Eastern Economic Association annual conference and SURF. After graduation, she will begin her career with NERA as an economic consultant.