LW - Is There Really a Child Penalty in the Long Run? by Maxwell Tabarrok

The Nonlinear Library: LessWrong

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Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Is There Really a Child Penalty in the Long Run?, published by Maxwell Tabarrok on May 17, 2024 on LessWrong. A couple of weeks ago three European economists published this paper studying the female income penalty after childbirth. The surprising headline result: there is no penalty. Setting and Methodology The paper uses Danish data that tracks IVF treatments as well as a bunch of demographic factors and economic outcomes over 25 years. Lundborg et al identify the causal effect of childbirth on female income using the success or failure of the first attempt at IVF as an instrument for fertility. What does that mean? We can't just compare women with children to those without them because having children is a choice that's correlated with all of the outcomes we care about. So sorting out two groups of women based on observed fertility will also sort them based on income and education and marital status etc. Successfully implanting embryos on the first try in IVF is probably not very correlated with these outcomes. Overall success is, because rich women may have the resources and time to try multiple times, for example, but success on the first try is pretty random. And success on the first try is highly correlated with fertility. So, if we sort two groups of women based on success on the first try in IVF, we'll get two groups that differ a lot in fertility, but aren't selected for on any other traits. Therefore, we can attribute any differences between the groups to their difference in fertility and not any other selection forces. Results How do these two groups of women differ? First of all, women who are successful on the first try with IVF are persistently more likely to have children. This random event causing a large and persistent fertility difference is essential for identifying the causal effect of childbirth. This graph is plotting the regression coefficients on a series of binary variables which track whether a woman had a successful first-time IVF treatment X years ago. When the IVF treatment is in the future (i.e X is negative), whether or not the woman will have a successful first-time IVF treatment has no bearing on fertility since fertility is always zero; these are all first time mothers. When the IVF treatment was one year in the past (X = 1), women with a successful first-time treatment are about 80% more likely to have a child that year than women with an unsuccessful first time treatment. This first year coefficient isn't 1 because some women who fail their first attempt go through multiple IVF attempts in year zero and still have a child in year one. The coefficient falls over time as more women who failed their first IVF attempt eventually succeed and have children in later years, but it plateaus around 30%. Despite having more children, this group of women do not have persistently lower earnings. This is the same type of graph as before, it's plotting the regression coefficients of binary variables that track whether a woman had a successful first-time treatment X years ago, but this time the outcome variable isn't having a child, it's earnings. One year after a the first IVF treatment attempt the successful women earn much less than their unsuccessful counterparts. They are taking time off for pregnancy and receiving lower maternity leave wages (this is in Denmark so everyone gets those). But 10 years after the first IVF attempt the earnings of successful and unsuccessful women are the same, even though the successful women are still ~30% more likely to have a child. 24 years out from the first IVF attempt the successful women are earning more on average than the unsuccessful ones. Given the average age of women attempting IVF in Denmark of about 32 and a retirement age of 65, these women have 33 years of working life after their IVF attempt. W...