Saturday, 13 June 2009

The 'Mothers versus everybody else pay gap'

Taken from Table 1 on page 23 of the Office For National Statistics' report The gender pay gap in the UK:
There is always a question of causation and correlation, but we see that although there is a small residual pay gap of 8% (at zero children in the lower part of the chart), single women actually earn slightly more than single men (from the upper part).

The fact that married/co-habiting women tend to significantly less than married/co-habiting men is because:
a) men with higher incomes are more attractive to women and hence more likely to be married (pushing the incomes of married men upwards);
b) women with lower incomes are more likely to get married and rely partly on their partner's income; and
c) married/co-habiting women are more likely to have children.
d) taking b) and c) together, there's also the point that women who are 'high flyers' are less likely to want to take career breaks to have children.

As the bottom part of the table clearly shows, the 'gender pay gap' rises the more children are involved. The underlying hourly figures show that men tend to earn slightly more, the more children they have (either because richer men can afford more kids, or because men with more kids have to work harder); and that women with more children tend to earn less, so the gap widens by 5% - 7% for each child.

On the level of a family-unit this is all irrelevant of course, as most couples tend to pool incomes and then the wife decides how it is spent anyway. To the extent that The State should get involved, the quickest fix, on a fiscally neutral basis and without increasing the bureaucratic burden on employers, would be to scrap Child Tax Credits (which discourage single mothers from working) and to roll it into a higher flat-rate, non-means tested Child Benefit of about £30 per child per week for the first three children per family and pay it to the mother. For a mother of two, that's an extra £3,000 a year, which would surely make up the bulk of the 14.9% pay gap.

Sure, people who oppose welfare in principle won't be happy, to you I say this: you were a child once - the extra bit of tax you are now paying to fund this is merely repaying the Child Benefit that your parents claimed for you in the dim and distant past, with interest.

What's not to like?


Witterings From Witney said...

If Dr. Katherine Rake has her way, the figures from the ONS and your analysis are going to get 'thrown out of the window'!

Mark Wadsworth said...

WFW, d'you mean the leather-faced bitch from the Tap-Manufactureres' Association?

Witterings From Witney said...

That is indeed the 'lady' in question - she is now head of the Family and Parenting Institute - see Anna Raccoon

and take note of her 'intentions'

marksany said...

"people who oppose welfare in principle." I'm not against welfare, I'm against means-testing, because it rewards the wrong behaviour (choosing to live on benefits and/or in the black economy) and punishes the right behaviour (getting a job)

I suspect the welfare system does this more to women than it does to men.

AntiCitizenOne said...

What's not to like?

I believe the state should treat everyone equally (hence a CD)

sconzey said...

I'm with Patri Friedman, kids have a lot of positive externalities and need to be subsidised. :P

AntiCitizenOne said...

Then parents can subsidise them. In crowded countries they have a larger set of negative externalities.

As far as I can tell the only positive externality of kids is that they keep the NI ponzi scheme going a little longer...