Changes in Women’s Employment Across Cohorts: The Effect of Timing of Births and Gender Wage Differentials

This paper studies the quantitative effects of changes in fertility patterns and rel-ative wages, on changes in employment of married women born between 1940 and 1960. We explore three channels linking these factors to employment decisions in a life-cycle model with experience accumulation. First, because child-rearing is intensive in women’s time, employment at childbearing ages increases as fertility is reduced. Second, if women have children later, they reach the childbearing age with more ex-perience, thereby increasing their incentive to remain employed when having children. Third, a decrease in the gender wage gap, ceteris paribus, makes working more at-tractive, which feeds back on employment decisions later in life because of experience accumulation. After calibrating the model to the life-cycle facts characterizing the 1940 cohort, we find that the decrease in fertility levels has a minor effect on employ-ment. However, the change in the timing of births has a large effect on employment very early in life, while relative wage changes affect employment increasingly with age. When taken together, these changes account for almost 90 percent of the increase in employment of married women throughout the life-cycle. ∗We thank Michele Boldrin, and Larry Jones for their support and advice. We hav