by Emily Oster
Other work on this shows similar results. When researchers look at everything together, they generally conclude that early maternity leave is beneficial.8
These benefits seem to focus on infancy, not later in life.9 However, one study that looked at kids in Norway showed that introducing a four-month paid maternity leave for moms led to higher education and even higher wages for their children when they grew up. These long-term effects were largest for the children of moms who were less well-off financially.10
This is all to say that if your job offers parental leave, you should take it. If it does not, it is worth considering whether you can take some unpaid leave. The FMLA gives you the right to twelve weeks of unpaid leave, assuming you’ve worked a sufficient amount during the previous year and your firm employs at least fifty people. Although the leave is unpaid, your employer must keep you on insurance coverage and hold your job (or a comparable one) for you until you return.
Although unpaid leave can be challenging for many families, and there are no federal maternity leave benefits in the US, it is worth exploring whether your state offers benefits. As noted above, a bunch of states do have paid-leave provisions, and hopefully more will introduce them over time. You can sometimes put together multiple state programs—temporary disability insurance plus paid family leave, for example—to create a longer paid period. Even if you can cobble together only a few weeks, the benefits for your child may be worth it.
BUDGETING
The final consideration in parental work is the impact on your family budget. This issue is complicated. It requires thinking about the income of each parent, and the cost of childcare. And ideally you’d think about both of these in both the short and long term.
Childcare is expensive, and most of it is paid in “after-tax” income. This means that your income needs to be considerably more than the cost of childcare to break even.
To see how this works, think about a family whose total income is $100,000, with each parent making $50,000. This family brings home about $85,000 after taxes.11 If both parents work and the family pays $1,500 a month for childcare, their total disposable income after childcare is taken into account is $67,000 a year. If one parent stays home, the family makes less (about $46,000 in take-home pay), but does not pay for childcare. The difference in take-home income is about half what it would be if the couple did not have any children.
This calculus becomes more complicated if childcare is more expensive. A full-time nanny, especially if you pay the legally required taxes and live in an expensive area, can run to $40,000 or $50,000 a year. For my example family above, that would completely wipe out one parent’s income. They’d be better off financially with one parent staying home.
This can also be true if one parent makes more than the other. In our example family, let’s imagine that the total income is the same, but now one parent is making $70,000 and the other $30,000. The parent making $30,000 is bringing home $25,500 a year; after the childcare expenses, the difference in disposable income with that parent working versus not is just $7,500.
These are just examples—your personal financial situation may be quite different. But a first step in figuring this out is to actually confront the situation. What would your family income be with one parent staying home versus both working? What are the realistic childcare costs? To do this well you probably want to use an online tax calculator (or a tax preparer) to help you think about the impact on your taxes of childcare cost deductions and so on.
This is the first piece of the calculation. But it shouldn’t be the last. There are at least two more things to think about.
First, the calculus changes as your child ages. Your kids will get less expensive as they grow up. School-age kids tend to cost less—public schools are free, for example. And if you stay in the workforce, your income will probably go up (this depends a bit on your job, but is true for many people). This means that even if working doesn’t seem like a good deal for the first few years, it may be a good deal in the long run. Of course, you could stop working when the kids are little and then return to work later—many people do—but this is easier to do in some jobs than others. And there is no guarantee that you won’t take a substantial salary hit when you do come back—to say nothing of the lost retirement savings.
There is no blanket rule for how to think of the short- and long-run trade-offs; it is simply to say that you shouldn’t limit your budget thinking to the ages of zero to three.
Second, you want to think about what economists call the “marginal value of money.” Let’s say your family would be better off in terms of income if you worked. You can calculate this in a dollar value, but that doesn’t necessarily tell you how much happier you’d be. You really want to think about how much your family would value that money in terms of what economists call “utility,” aka happiness. How different will your life be? What will you buy with this money? If it doesn’t make you happier, then it isn’t worth much, even if it is money.
MAKING A CHOICE
Whether to have all adults in the household work outside the home is not an easy choice for most people, and it is nearly impossible to give blanket advice. The data suggests that—putting aside early maternity leave, which has some significant benefits—there is not much evidence that having a stay-at-home parent positively or negatively affects child development.
This means it really comes down to what works for your family. This includes thinking about your budget, but also thinking about what you want. Does one parent want to be home with the kid or not? In a sense, this is probably the main consideration, but it is also the most complex and hard to predict. Before you have a child, it’s pretty difficult to tell if you’ll want to be with them all the time.
Some people love being with their baby every minute and cannot imagine being away.
Some people eagerly look forward to returning to work on Monday morning, even if they love their kids just as much.
And this may change as the children age. Some people really love babies. I have found that as my kids get older, I enjoy being with them more. I still do not want to be a stay-at-home parent, but I think I’d like it more now than I would have when they were younger. Try to be honest with yourself about what you want.
None of this is very helpful to you in making a choice. Sorry! Ultimately, you are on your own.
To conclude: By acknowledging that the choice to stay home or not is just that—a choice, with factors pushing you in various directions—we can perhaps start to move away from the judgmental attitude that seems to crop up on both sides of the aisle. I’d like to be able to say that I choose to have a job because that is what I want, and I’d like friends to be able to say they choose to stay home because that is what they want. And I’d like us to be able to say both these things without my being tempted to look down my nose at those friends and their being tempted to imply that my children will not have the best start in life.
Is that so much to ask? I think it is not.
The Bottom Line
Babies benefit from their mothers taking some maternity leave. However, there is little evidence suggesting that having a stay-at-home parent after the parental leave period has either good or bad consequences for children.
Decisions about whether to have a parent stay home should consider your preferences, along with consequences for your family budget in both the short and long term.
Stop judging people!
10
Who Should Take Care of the Baby?
If you do decide to, as I said previously, “have all the adults in the household work outside the home,” you are then immediately faced with the next question: What on earth will you do with your baby?
When I was newly pregnant with Penelope, Jesse and I took a trip to give some seminars in Sweden. Between bouts of vomiting in our entirely IKEA-outfitted apartment (did you know IKEA makes
shampoo?), I could not help but notice with envy the childcare setup that seemed to be available to Swedish parents.
Parents in Sweden get a lot of parental leave, but in addition, once they go back to work, there are a variety of excellent government-provided childcare options. As we walked around Stockholm, there were many groups of small children trekking between parks, hanging on to ropes to stay together. It looked awesome! If the Swedes had offered us a job, I probably would have argued for decamping there, at least until Penelope was ready for school. They did not.
Back in the US, childcare is not as simple. There are many options, but no default government-provided option as there is in many European countries. This is the case for many reasons, but it’s probably best understood as politics. These European countries provide more services of all kinds—health care, for example—and childcare is a part of that. This is also a case where countries are probably drawn to doing what they have long done. People in Sweden expect good government-provided childcare. People in the US might wish for it, but they don’t expect it.
If you don’t live somewhere with an obvious childcare option, you’ve got to figure this out for yourself. Day care or a nanny are the most standard setups, but you could have a family member pitch in, or have some hybrid of these. Even within these basic options, there are many variations. Take day care. What kind is right for you? Home day care? Center-based day care? If you hire a nanny, what kind of nanny? When looking for our first nanny, a reference described one candidate as “not a flash-card nanny.” I didn’t know that was a kind. Did I want that kind?
I’m going to argue that you can simplify this whole thing, though, by taking a page from the decision-theory playbook. More specifically, you need a decision tree. Here’s an example—a kind of parenting decision tree. For the purposes of this chapter, we’ll focus on outside childcare options. If you have an extended family member who can help, you can add another limb to your tree.
In economics, we teach people to “solve the tree.” To do this, you work backward from the bottom. First, decide what nanny you would want if you had to have a nanny (in this case, I gave you three choices). Then you’ve solved that leaf of the tree. Then decide what kind of day care you would want if you had to have day care (here, you’ve got four choices). Then compare those two.
Now, rather than comparing the wide range of options in each category, you are facing a very specific choice: Do I prefer my “optimal” day-care setup or my “optimal” nanny setup?
So there is your theory. Of course, theory doesn’t tell us the right answer, only how to think about the problem. To get to the answer, we need to combine theory with evidence—specifically, evidence on different childcare options, and how to compare them.
THE DAY-CARE OPTION
Imagine we find ourselves in the left-hand side of the tree: day care. How do you choose the best one?
Data to help with this comes from studies like the National Institute of Child Health and Human Development Study of Early Child Care and Youth Development (I will call this the NICHD study going forward, just to save some words).
The NICHD is a longitudinal study (meaning it follows kids over time) of more than one thousand children, designed to evaluate the impacts of various types of childcare (day care, nanny, family member) on child development. NICHD researchers were interested in outcomes like language development and behavior problems. This study will be useful in comparing day care to nanny as well, but for the moment we can focus on the comparison across day care options.
In the study, researchers actually went into the day-care centers where the study children were enrolled and evaluated them. They sat in the classroom and observed the teachers and recorded other facts about the day care. And then they ranked them, determining which day cares were higher “quality” than others.
They were looking for very specific qualities in a high-quality day care, which we’ll discuss in a moment. But before getting into that, it’s useful to see how quality matters.
A first paper using this data looks at the relationship between childcare and cognitive ability and behavior issues at the age of four. 1 To do this, the authors effectively compared children who went to higher-quality day cares to those who went to lower-quality day cares. Day-care attendance is through childhood up to the age of four (they may still be in the evaluated day care, or may have moved on).
The authors found that attending higher-quality day care strongly correlated with better child language development: kids who went to better day cares seem to talk more. When they looked at behavior problems, though, there did not seem to be a relationship to day-care quality in either direction—the effect was about zero.
The researchers doing this study followed the children through sixth grade and continued to find that day-care quality is associated with better vocabulary outcomes, but not with behavior.2
It should be clear by this point in the book that there is an obvious issue with this analysis, which is that day-care quality also relates to other features of the family. On average, higher-quality day care is more expensive, and therefore, a different set of kids are enrolled—kids who, for example, come from better-off families. It is therefore hard to know which outcomes to attribute to the family and which to the day care.
An advantage of this particular study is the ability to control extensively for family background. They did home visits, so they could evaluate something about the quality of parenting as well. Parenting matters a lot—way more than day care—but their day-care results remained even after adjusting for the parenting differences they observed. Of course, concerns remain about the possible role of parental characteristics we do not observe.
With these caveats in mind, the evidence reinforces the commonsense intuition that if you are going to send your child to day care, it should be a good one. Leading to the obvious question: How do you know if it’s good? One way to get a sense of this is to go back to the NICHD study and consider how the researchers evaluated quality. You may not be able to replicate their methods exactly, but you can at least get a sense of what they were looking for.
Let’s start with what they were not looking for: what I call “fancy” day-care features. There is no box to tick for “early Mandarin exposure” or “organic snacks.” They also did not focus on things like whether the day care tried to teach kids facts about penguins. Overwhelmingly, the evaluation of day-care quality focused on the interactions between the providers and the children.
The quality evaluation has several parts. First, there is effectively a checklist of questions on safety, fun, and “individualization.” Here’s a simple version:
Safety
No exposed outlets, cords, fans, etc.
Safe cribs
Written emergency plan
Disposable towels available
Eating area away from diaper area
Toys washed each day
Teacher knows about infant illnesses
Fun
Toys can be reached by kids
Floor space available for crawlers to play
3 different types of “large-muscle materials” available (balls, rocking horse)
3 types of music materials available
“Special activities” (i.e., water play, sponge painting)
3 materials for outdoor infant play
Individualization
Kid has own crib
Each infant is assigned to one of the teachers
Child development is assessed formally at least every 6 months
Infants offered toys appropriate for their development level
Teachers have at least 1 hour a week for team planning
Most of these things can be easily observed and recorded on a day-care tour, and the checklist is basically the same for center-based or home-based day care.
In addition, they also assessed quality by watching the child at day care several times. The observation periods are fairly short—a burst of four ten-minute observation periods over the course of a half day. This is probably harder to replicate, but if you are considering a day care, it would not be unreasonable to ask if you can quietly observe from the sidelines for ten to fifteen minutes. I would probably avoid actually bringing a numerical observation sheet, but, you know, that’s up to you.
What were the observers looking for? First, some basic things. Is the adult (or adults) available and interacting with the children (i.e., are they on their phone, or are they down on the floor with the babies)? Do they have positive physical contact with the children (reinforcing good behavior with a hug, holding the baby)?
Then there are some questions on developmental stimulation. Does the adult read to the children? Do they talk to them? Do they respond when the baby makes a noise? (“Gah!” “That’s right, that’s a hippo. Hip-po. Do you want to hold the hippo? Here you go!”)
Third, there is behavior. All babies and children act out at various times. The question is, how does the adult respond? Do they respond to negative behavior by physically restraining the child or children involved (the researchers’ question specifically is, do they “restrict them in a physical container”)? Do they hit? Do they speak negatively to the child? These would all be (very) bad signs.