Establishment-Level Wage Effects of Entering Motherhood
Posted: 21 Apr 2009
Date Written: April 2009
Abstract
We analyse the wage effects following employment breaks of women who enter motherhood using a novel matching approach where mothers’ wages upon return to work are compared to those of their female colleagues within the same establishment. Using an administrative German data set, we apply a fixed-effects propensity score matching based on information two years before birth of the first child. Our results yield new insights into the nature of the wage penalty associated with motherhood: when matching with establishment-specific effects we find that first births reduce women's wages by 19%, whereas ignoring the identifier and matching across all establishments would yield a wage cut of 26%. We therefore conclude that selection into establishments is an important explanatory factor for the family pay gap.
JEL Classification: J13, J31, C14
Suggested Citation: Suggested Citation