Motherhood and Opportunity Cost

"Darling, haven't you ever heard of a delightful little thing called boarding school?"
--Baroness Schrader (The Sound of Music)

A significant factor in gender pay differences is the choice made by many women to bear and raise children. Studies suggest that highly skilled women could surrender up to 33% of potential lifetime earnings if they mother children.

From an opportunity cost perspective, lost wages can be viewed as the value that women place on motherhood. Mothers trade potential to earn market income for the opportunity to raise children.

Because of the challenges associated with child bearing and child raising, it is sometimes difficult to view this as a worthy trade.

Like all humans, however, mothers are economic actors. In addition to psychic income that can accrue from the process, staying home to raise children can bring material benefit as well. For example, cooking, cleaning, teaching and other work necessary for raising children carry real economic value. If they were not insourced by stay-at-home moms (or dads), then these activities would need to be outsourced on the market.

While outsourcing to specialists allows for efficiency gains, taking child raising activities off the market and producing in-house offers better control over the process and reduces associated transaction costs.

When insourcing is chosen, it appears that the benefits of motherhood have been deemed worthy of the opportunity costs.