Female brain-drain "a myth"

The "hidden brain-drain" of high-flying women opting out of the U.S. workforce to spend more time with their kids is a myth, a new report has claimed. Instead, the real reason for the decline in the number of women in the labour force is the overall weakness of the labour market.

An analysis of labour force statistics by the Washington-based Center for Economic and Policy Research (CEPR) suggests that while the percentage of working mothers has been in decline since 2000, so to has the number of working women without children.

What's more, the so-called "child penalty" on labour force participation for women aged between 25 and 44, was 20.7 percentage points in 1984 and has fallen consistently over the last two decades, down to 8.2 percentage points in 2004.

This means that in 2004, labour force participation by women in this age group with children at home averaged 8.2 percentage points less than for women without children at home.

"Much has been made of the fact that the labour force participation rate of mothers has fallen in recent years, but that's not about motherhood or decisions to stay at home. It's about the lackluster labour market," argues economist Heather Boushey, author of the CEPR report.

Indeed, she pointed out, the impact of having children in the home on women's labour force participation actually fell last year compared to previous years.

The early 2000s recession led to sustained job losses for all women - those with and without children at home - and the labour market only just returned to its 2000 employment level in January 2005, nearly four years after the recession began.

The report also says that during this recession, women experienced their largest employment losses in decades and once this is controlled for, the presence of children at home plays a smaller role in women's labour force participation than it did in previous years, going back to 1984.

As a result, she argues, the idea that women are increasingly dropping out of the labour force because of their kids is largely a "media frenzy"

The hidden brain-drain came to prominence earlier this year following research by the Center for Work-Life Policy which found that out of the 1981 class at Stanford University, 57 per cent of women graduates had left the workforce and of three graduating classes from Harvard Business School, only 38 per cent of women were still in full-time careers.

The research also found that more than four out of 10 women who exited the workforce did so to gain more family time.

But Heather Boushey said that between 2000 and 2004, 30-something mothers with advanced degrees saw no statistically significant change in the effect of children on their labour force participation rates.

In fact, the child penalty is smallest for this group of mothers and they are more likely to work than other mothers.

"The media hype about women opting out of employment is probably a result of the reality that for highly educated women, dropping out of the labor force is usually associated with having a child at home," the report concludes.

"What is interesting here is that just about the only reason that better-educated older women drop out of the labor force in the 2000s is to care for small children while at the same time, most highly educated women stay in the labor force when they have children."