NCPA - National Center for Policy Analysis


April 12, 2005

A large percentage of highly qualified women choose to take time off from their careers, and in doing so, pay a huge price in terms of future job opportunities and financial rewards, says Laura D?Andrea Tyson, dean of the London Business School.

The opt-out hypothesis could explain why, according to a recent U.S. survey, 1 in 3 women with an MBA is not working full-time, versus 1 in 20 men with the same degree.

According to the survey, summarized in the Harvard Business Review:

  • Some 37 percent of the women surveyed -- and 43 percent of those with children -- voluntarily left work at some point in their careers, with the average break lasting about two years.
  • Of the women who took time off work, 93 percent wanted to return to their careers; unfortunately, only 74 percent were able to do so, with 40 percent returning to full-time positions and 24 percent taking part-time positions.
  • Overall, women who took time out from careers lost an average of 18 percent of their earning power; in business careers, the average loss was 28 percent even though the average break lasted little more than a year.

Such reductions in earnings potential are a primary reason the earnings gap between men and women of comparable education levels increases during child-bearing and rearing years, says Tyson.

Furthermore, the survey results indicate women value jobs with reduced hours and flexible work arrangements. Women are less likely to opt out of work if their employers offer flexible career paths, allowing them to increase or decrease their professional responsibilities at different career paths, says Tyson.

Source: Laura D?Andrea Tyson, "What Larry Summers Got Right," BusinessWeek, March 28, 2005.


Browse more articles on Economic Issues