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Does income moderate the satisfaction of becoming a parent? In Germany it does and depends on education

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Abstract

We investigate the role of individual labor income as a moderator of parental subjective well-being trajectories before and after the birth of the first child in Germany. Analyzing the German Socio-Economic Panel Survey (SOEP), we found that income matters negatively for parental life satisfaction after the first birth, though with important differences by education and gender. In particular, among better educated parents, those with higher income experience a steeper decrease in their subjective well-being. Income is measured as the average of individual labor income within 3 years before the birth. We provide evidence that our results are robust to potential endogeneity between income and first childbirth using the individual labor income at 3 years from the event, and for an alternative measure, i.e. the equivalent household income. Results are discussed in terms of different aspirations and difficulties parents may experience, especially in terms of work and family balance.

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Notes

  1. The role played by a family’s social and economic background, including parents’ immigrant status, on children’s educational outcomes is widely acknowledged and emerges from both cross-country and single-country studies (Ermisch and Francesconi 2001; McIntosh and Munk 2007; OECD 2010; Schüller 2015). Furthermore, there is a consensus that national educational systems and schools differ in reducing or amplifying the weight of the family background on children’s outcomes. In particular, in Germany, it appears very important the fact that the decision about which educational track children will follow is made at the early age of ten (Dustmann 2004).

  2. In this paper, we mainly refer to life satisfaction, but we may cite papers where the focus is on “happiness”. This is standard practice among social scientists (e.g., Easterlin 2010). Subjective well-being is, in fact, a broad category, which involves positive and negative feelings, expressions of happiness, and cognitive judgments about life satisfaction (Diener and Lucas 1999). These components of subjective well-being often correlate substantially and the terms signifying its various dimensions can be used interchangeably.

  3. Specifically, we exclude all the individuals who declare themselves non-working at least once during the observational period. As a robustness test, we provide the estimates obtained by including in the sample also non-working individuals in the Appendix. In fact, results remain almost unaffected.

  4. This assumption does not affect our estimates since we control for labor-force status.

  5. Clark and Georgellis (2013) put into a single equation the two equations employed by Clark et al. (2008) to separately estimate the effects on the individual level of SWB before and after a life event. As explained by the authors, estimating lags and leads jointly is the approach that correctly allows for plotting the estimated coefficients on one graph. The same is not true when the lag and lead equations are estimated separately because of different omitted categories. Myrskylä and Margolis (2014) adopt the Clark and Georgellis (2013) model, and the only differences between our model and that estimated by the former is the number and the length of the lags and leads on which the parental trajectory is built.

  6. Ferrer-i Carbonell and Frijters (2004) show that treating life satisfaction as an ordinal variable versus a cardinal one makes little difference.

  7. The SOEP includes a question concerning the planning of any pregnancy, but only for a sub-sample of mothers at their first childbirth, namely new mothers from 2002 onwards. These new mothers are asked whether the pregnancy was planned, unplanned, or thanks to assisted fertilization. This sub-sample includes 2035 different individuals, among whom 27% (551 individuals) declare that the pregnancy was unplanned, 71% (1445 individuals) declare that the pregnancy was planned and slightly less than 2% (39 individuals) declare that the pregnancy came after assisted fertilization. Looking at the age of these individuals, we can verify that unplanned pregnancies are concentrated among women between 20 and 30 years of age (50%), they are less frequent among women between 30 and 40 years old (42%), and quite rare for women over 40 (8%). Thus, the control on individuals’ age groups is crucial for addressing the possible bias arising from the presence of unplanned pregnancies.

  8. Unlike those for the first child, the trajectory dummies for other parities are not mutually exclusive.

  9. Since these calculations are very necessary to rightly interpret the results in terms of trajectory of SWB for each income group, for the sake of brevity, in Section 5, we do not show the raw estimates of Eq. 2, but instead we only provide the results of such calculations. The estimates are available upon request.

  10. As already said in the previous footnote, the raw estimates of Eq. 2 are made available upon request.

  11. Also in this case, we do not show the raw estimates of Eq. 2 using the individual labor income at T-3 from the birth. However, such estimate are made available upon request.

  12. Also in this case, we do not show the raw estimates of Eq. 2 using the equivalent income. However, such estimates are made available upon request.

  13. In our sample, the correlation between the years of education of women and the level of education of their mothers is 0.13 (significant at 1%). The correlation with the education of their fathers, meanwhile, is 0.16 (significant at 1%). Regarding men, the correlation is 0.25 (significant at 1%) with the level of education of their mothers and 0.20 (significant at 1%) with that of their fathers. Although the correlation is surely relevant, we think that this evidence does not alter our line of reasoning or the results.

  14. Also in this case, we do not show the raw estimates of Eq. 2. However, such estimates are made available upon request.

  15. Also in this case, we do not show the raw estimates of Eq. 2 on the sample including not-working individuals. However, such estimates are made available upon request.

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Acknowledgements

The authors thank the two anonymous referees for their comments and helpful suggestions.

Funding

The research leading to these results has received funding from the European Research Council, under the European ERC Grant Agreement no. StG-313617 (SWELL-FER: Subjective Well-being and Fertility).

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Authors and Affiliations

  1. Dondena Centre for Research on Social Dynamics and Public Policy, Bocconi University, Milan, Italy

    Marco Le Moglie & Letizia Mencarini

  2. Department of Economics and Management (DISEI), University of Florence, Florence, Italy

    Chiara Rapallini

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  1. Marco Le Moglie
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  2. Letizia Mencarini
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  3. Chiara Rapallini
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Correspondence to Letizia Mencarini.

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Appendix: Estimates including in the sample the not-working parents

Appendix: Estimates including in the sample the not-working parents

The estimates presented in Table 3 rely on a sample including both unemployed and employed individuals, but excluding all those who declare themselves not to be working. Possibly, the effect of childbirth on the level of SWB might be different for non-workers, as the decision to drop out of the labor market might be associated with a better general attitude towards parenting, and thus with a higher level of satisfaction with having a child. This could reduce the room for a generalization in the interpretation of our results. In order to address this issue, in the present section, we estimate Eq. 2 again including in the estimation sample non-working individuals. To do that, we set their individual earned income to 0 and we added a dummy to the control variables equal to 1 if the individual is not working at a given time and 0 otherwise. The trajectories by gender for each tertile of individual labor income are presented in Table 7 and plotted in Fig. 9a, b.Footnote 15 As will be noted, the decision to include non-working individuals does not affect the main results of our analysis, thus confirming the robustness of their interpretation across labor force statuses.

Table 7 Mothers’ and fathers’ trajectories of of subjective well-being around the birth of the first child, by tertile of individual labor income
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Fig. 9
figure 9

Mothers’ and fathers’ trajectories of subjective well-being from 3 years before up to 5 years after the birth of the first child, by tertile individual labor income (reference category of subjective well-being at time T-3). Estimations including in the sample non-working parents. Point estimates are calculated starting from the coefficients for mothers and fathers showed in columns 1 and 2 of Table 7. O, \(\square \), and X indicate significance at 10, 5, and 1%

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Le Moglie, M., Mencarini, L. & Rapallini, C. Does income moderate the satisfaction of becoming a parent? In Germany it does and depends on education. J Popul Econ 32, 915–952 (2019). https://doi.org/10.1007/s00148-018-0689-9

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