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Soaring Child Care Costs and a Widening Gender Pay Gap - Sobering Labour Market Economics

Graham Watson

9th March 2023

Here is another stark reflection on the impact of high cost childcare on both female participation in the labour force and household finances. The fact that childcare costs have risen by 44% since 2010 should be alarming enough especially in a period where real wages for working parents have often subsided.

Please read: A sick child means a £700 hole in our budget: that’s the reality of life as a working parent

However, then read the following, the result of research by the Centre for Progressive Policy: "In the UK, 540,000 mothers have been prevented from entering paid work due to a lack of suitable childcare; 880,000 have reduced their hours at work; and 470,000 have quit their jobs...Enabling mothers to work the hours they want would generate upwards of £9.4bn in additional earnings a year, it calculates, an additional economic output equivalent to 1% of UK GDP.

That's a pretty significant opportunity cost of lost output isn't it?

Widening gender pay gap for high-educated parents

Rather disappointingly, research from the University of Kent suggests that the gender pay gap for the most educated has increased since the late 1970s, with highly educated women earning 69% of their spouse's wages.

This is attributed, again, to the costs of childcare, the so-called motherhood penalty caused by women leaving the labour force to have children and the social and economic structures that continue to underpin this.

Please read: UK gender pay gap for higher-educated parents has grown since 1970s – study

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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