Maternal Employment and Child Poverty

Background:

The impacts of parental employment on children’s well-being in developed countries have been well documented. However, given the lack of comparable national datasets, studies examining such issues in middle-income countries, especially from a comparative perspective, is scarce. Using harmonized microdata from 16 middle-income countries (including three clusters: Latin America; Emerging Economies [India and China]; and Eastern Europe and Central Asia), this paper is the first to profile a holistic picture of whether women with children work and whether these mothers’ earned wages are sufficient to provide children’s basic needs. We pay particular attention to how boosting maternal employment (via job entry or increased wages) could reduce child poverty, and how maternal employment varies with the income ladder across and within countries.

Method:

By merging each country of interest’s person-level and household-level datasets from Waves VII, VIII, IX (around 2007, 2010, 2013) in the Luxembourg Income Study Database, we use recently available nationally representative data and employ simple arithmetic to study this issue. The sample includes prime working-aged women (aged 15–64) residing with at least one child aged 18 or younger. The poverty line is set at 50 percent of median household equalized income. Raising maternal earnings and increasing labor market participation are considered two proxy measures for maternal employment growth.

Three versions of the simulation are performed. First, how does boosting maternal employment impact children living in poverty overall by bringing all mothers with children aged 3 or older into the labor force or increasing their earnings incrementally by 10 or 20 percent, respectively? Second, a similar calculation will be applied but in a cumulative way, which considers job entry and earning increase simultaneously. Third, effective tax rate will be calculated and applied to examine how new disposable income resulting from increased earnings could help lift children out of poverty.

Results:

Our preliminary results reveal that, on average, over 50% of mothers within each country are working mothers, except that Indian mothers work disproportionally less. The labor force participation rate is substantially higher among mothers at the top 20% of the income spectrum than among those at the bottom 40% in most countries. The share of Indian mothers’ earnings as a percentage of household gross income is extremely low, but mothers in China and Russia contribute considerably to household income regardless of the youngest child’s age. Our simulation results suggest that job entry reduces children’s monetary poverty much better than any level of maternal earning increase across all the countries studied. Job entry coupled with increased earnings could further cut poverty by 5 to 10 percentage points.

Conclusion and Implication:

Preliminary findings show a great potential for maternal work to benefit children’s economic well-being in middle-income countries, a cluster of economies which disproportionally contribute to global child-poverty statistics, and finding a better intervention solution is crucial. The provided evidence could help guide future research on global child poverty and to assist policy makers or organization practitioners in designing social protection programs that buffer the detrimental consequences of childhood deprivation.