The Influence of Children on Female Wages: Better or Worse in Australia?

Australian women’s participation in paid work has been and continues to be strongly influenced by gendered patterns of parental care. This thesis examines how children structure another dimension of economic stratification in Australia, hourly wages. Previous studies from the United States and Great Britain show women who care for children have lower wages than their childless counterparts and that this motherhood gap in pay is partly explained by mothers’ interruptions to employment and movement into part-time jobs. Outside the US and Britain fewer studies of the motherhood gap in pay have been undertaken. Compared to these two countries, Australia has lower maternal employment rates and higher rates of part-time work. These features may increase wage disparities between mothers and childless women in the Australian labour market. Australia, unlike Britain and the United States, has a history of centralised wage regulation, leading to a comparatively narrower wage distribution and a higher minimum wage. These institutional features may offer protection against downward wage mobility. This thesis investigates how motherhood influences the hourly wages of Australian women using panel data. Previous Australian research has documented static wage disparities, relying on cross-sectional data. My analysis draws on the first six waves of the Household, Income and Labour Dynamics in Australia (HILDA) survey (2001-2006), a large, nationally representative panel survey. The thesis is comprised of three studies. First, I investigate the overall motherhood gap in pay in Australia in 2001. In aggregate, the mean wage of women with children is equal to that of childless women. After imputing a potential wage for mothers who are not employed, I show that the overall motherhood gap in pay would be considerably wider in Australia were fewer mothers to exit the labour force. This is because mothers without tertiary qualifications are less likely to be employed than mothers with a certificate, diploma or degree. Second, I use the panel design of HILDA to estimate female wage equations using fixed-effects regression. Controlling for differences in observed human capital, part-time work and unobserved heterogeneity, I find each child lowers wages by 6%. The analysis also reveals that mothers’ propensity to work part-time does not explain any of the Australian motherhood gap in pay. After incorporating detailed controls for time-varying job characteristics, I find that part-time wages are 14% higher than full-time wages. On average, the pay premium for part-time work more than offsets the pay penalty associated with one or two children. Third, I narrow my focus to Australian women experiencing a birth between 2001 and 2006, assessing whether the wage premium for part-time work extends to transitions at this point in the lifecourse. I investigate patterns of wage growth among mothers returning to employment within 3 years of a birth. My results reveal that Australian mothers who transition from full-time to part-time hours have significantly higher wage growth than mothers who remain in full-time employment. Taken together, my results suggest women’s part-time employment has a distinctive form in Australia. I find no evidence Australian mothers’ part-time employment constitutes a low-paid segment of the labour force. Isolating a causal explanation for the comparatively high wages of Australian women’s part-time employment is difficult, though two factors are likely to be important. First, Australian mothers’ participation in part-time employment rapidly increased during the 1970s and 1980s, a period when wages were largely regulated through collective agreements. Although wage determination has become more deregulated since the mid-1980s, the principle that part-time employees should receive pro rata wages does not appear to have been contested by Australian employers. This could be because demand for labour in feminised industries has remained strong. Second, decisions to remain attached to employment around childbirth could possibly be structured by the availability of part-time work. Rather than transition into a lower waged part-time job, Australian mothers may exit the labour force drawing on supports for stay-at-home mothers in the Australian family payment and taxation system. In the longer term, mothers who continue in part-time work may have fewer opportunities for upward mobility and flatter wage trajectories. As additional waves of HILDA become available, such divergences in wage trajectories will be able to be empirically investigated. This study examines female wages in a period of strong economic growth and low unemployment. Part-time employment may not be positively associated with wages in a macroeconomic context of lower demand for labour and rising unemployment. An interesting avenue for future research would be to compare how transitions into part-time work influence female wages across periods of strong and weak labour market growth.