a route out of poverty? mothers’ employment and wages in the uk families and children study...
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A route out of poverty? A route out of poverty? Mothers’ employment and wages Mothers’ employment and wages
in the UK Families and Children in the UK Families and Children Study Study
Francesca Bastagli and Kitty Stewart Centre for Analysis of Social Exclusion
London School of Economics
Funded by the Nuffield Foundation Work in progress
SPA Conference July 2010
Outline Outline
Motivation and questionsThe dataEmployment trajectoriesWagesFindings and discussion
Motivation and questionsMotivation and questions UK government policy emphasises employment as a
route out of poverty.
“Getting a job, keeping a job and having the chance to progress up the earnings distribution out of low-paid work are the key to improving life chances” (HM Treasury, 1999).
Mothers of young children encouraged to enter or return to work and to remain in paid work – through the tax credit system, childcare and labour market policies - to raise family income.
For example: “In addition to assisting with employment retention, childcare can also promote career advancement. ... This will help to increase lone parent employment rates, decrease child poverty, reduce the gender pay gap and boost productivity” (Inter-departmental Childcare Review, 2002).
Motivation and questionsMotivation and questions
Do mothers:
Enter and keep paid employment? Progress up the earnings
distribution?
Special attention paid to:
Mothers of young children Low-skilled mothers
The dataThe dataUK Families and Children Study (FACS)Annual panel study of families with
dependent children Sampled from Child Benefit records 1999-2005- Wave 1-2: lone parents and low-income couples - Wave 3 (2001) onwards: higher-income couples
included to yield representative sample of British families with dependent children.
Employment trajectories Employment trajectories Employment trajectory sample sizes 2001-
2005Trajectory Frequency Percent
Working FT stable 653 15.6
Working PT stable 664 15.8
Working stable PT-FT
555 13.2
No work stable 937 22.4
Exiters 212 5.1
Entrants 449 10.7
At home with one work episode
304 7.3
In and out 418 9.9
Total 4192 100
Employment trajectories Employment trajectories Examples of individual employment
trajectories
Yellow: not working; Pink: working full time; Blue: working part time
Wages Wages Hourly wage
weekly wage/n. hours worked weekly
Wage growth
wgr= [wl – wf / wf]wgrw= wgr / y
wl: last observed wagewf: first observed wagey: number of years between first and last
observed wage
Wages Wages
Median hourly wages: by trajectory and skill level
Source: FACS 2001-2005
Trajectory Median hourly wage
Median hourly wage Low
skilled
Median hourly wage Skilled
Working FT stable
6.9 5.9 8.4
Working PT stable
5.8 5.5 7.8
In and Out 5.7 5.2 8.0
Total 6.1 5.5 8.0
WagesWagesHow does the final wage of mothers employed
throughout the period compare with the final wages of mothers who moved in and out of work, controlling for starting conditions/initial wages?(Regressors in Model 2 include: age, own health, n of children, lone parent, tenure, new birth)
OLS regression on final hourly wage (log).
Source: FACS 2001-2005
Model 1Initial wage and work trajectories
Model 2+ Personal
and HH characteristics
Initial wage (log) 0.45*** 0.43***
Trajectory – FT stable omitted
Working PT stable -0.09*** -0.11***
In and Out -0.11*** -0.14***
NR-squared
21220.27
21220.31
WagesWagesEmployment trajectory and final wage by skill
level.
OLS regression on final wage (log), includes personal and HH characteristics regressors (i.e. Model 2).
Source: FACS 2001-2005
Low skilled Skilled
Initial wage (log) 0.33*** 0.44***
Trajectory – FT stable omitted
Working PT stable -0.05*** -0.15***
In and Out -0.11*** -0.14***
NR-squared
14620.18
6560.31
Wage growthWage growth
Hourly wage growth: by trajectory and skill level(weighted by N of years between first and last observed wage)
Source: FACS 2001-2005
Note: Percentage change in hourly earnings weighted by years (2001-2005) from Annual Survey of Hourly Earning (ASHE) for all employees: WOMEN: 4.8.
Trajectory Wage growth Sample median
Wage growth
Low skilled
Wage growth Skilled
Working FT stable
4.7 4.3 5.3
Working PT stable
4.1 4.0 4.4
In and Out 3.4 3.3 4.1
Total 4.1 3.9 4.5
Wage growthWage growthProbability for a working mother to
experience: a)Wage growth above the sample median
(4%) b)Negative wage growth.
Dprobit on wage growth>=4%. Regressors: work trajectories, personal and HH characteristics.
Source: FACS 2001-2005. Note: Table reports marginal effects.
Full sample Low skilled Skilled
Trajectory – FT stable omitted
Working PT stable -0.06** -0.03 -0.12***
In and Out -0.11*** -0.09** -0.13***
NPseudo R-squared
21180.01
14620.01
6560.03
Wage growth Wage growth Probability for a working mother to
experience negative wage growth.
Dprobit on wage growth<0. Regressors: work trajectories, personal and HH characteristics.
Source: FACS 2001-2005. Note: Table reports marginal effects.
Full sample
Low skilled Skilled
Trajectory-FT stable omitted
Working PT stable 0.11*** 0.07** 0.16***
In and Out 0.15*** 0.09** 0.24***
N Pseudo R-squared
21180.04
14620.03
6560.06
Findings Findings 1. UK mothers follow a multitude of employment
trajectories. Over the 1999-2005 period: 17% In and Out, 33% Mixed Enter/Exit/PT, vs 7% in FT stable employment.
2. Compared with working mothers in FT stable employment, mothers following interrupted pathways have lower final wages (controlling for initial conditions and changes in circumstances over time).
3. This difference is significantly higher among skilled women than for low skilled women; the “wage penalty” is higher among skilled mothers.
FindingsFindings
4. Working mothers following interrupted work pathways are less likely (-11%) to experience a wage growth rate equal to or above the sample median. For skilled women the probability is -13%, while for low skilled women it is -9%.
5. Mothers on In and Out trajectories are more likely to record negative wage growth (15%) compared with those in FT stable employment. For skilled women, this probability reaches 24%, while for the low skilled it is 9%.
