The Relationship between Age at First Birth and Mother's Lifetime Earnings: Evidence from Danish Data

BACKGROUND: Having children creates career interruptions and reductions in labor income for women. This study documents the relation between the age at first birth (AFB) and women’s labor income. We study these dynamics in the short run (i.e. ratio between labor income at AFB and two years prior to AFB) and long run (i.e., positive/negative differences in total lifetime labor income). METHODS: Using unique Danish administrative register data for the entire Danish population, we estimate the age-income profiles separately for college and non-college women conditional on marital status, and mothers’ age at first birth (AFB). We compute the lifetime labor income differentials by taking the differences between the labor income of women with and without children at each AFB. RESULTS: The short-run loss in labor income, defined as the difference in percentages between the income earned two years prior to AFB and income earned at AFB, ranges from 37% to 65% for college women and from 40% to 53% for non-college women. These losses decrease monotonically with respect to AFB for both education groups. Our results on the lifetime labor income differentials between mothers and women without children also show a net effect that is monotonic (from negative to positive) in AFB. With AFB<25, the lifetime labor income loss for college women is -204% of their average annual labor income and this figure is -252% for non-college women. There are lifetime labor income gains with AFB>31. The largest gains for college women are 13% of their average annual income and this figure is 50% for non-college women. CONCLUSION: Women have a large and unambiguous short-run reduction in labor income at their AFB. In terms of lifetime labor income, both college and non-college women, compared to childless women, are associated with lower income of more than twice their respective average annual income when bearing a child at AFB<25. In other words, women with AFB<25 are associated with a lower lifetime income of more than two years of annual labor income. The lifetime labor incomes for college and non-college women associated with AFB>31 are relatively higher.