The Motherhood Wage Penalty in Germany

Abstract

As in other OECD countries, female and maternal employment rates have increased tremendously in Germany, though there is still a wage "gender gap" which is largest for women with children. This is often explained by the depreciation of human capital, the signaling effect of (long) employment breaks and the possible discrimination of mothers in the labour market. However, research has neglected the question what influence it has whether mothers stay out of work beyond the maximal length of the legal leave of absence or not. We expect wage penalties particularly for those mothers who extend their leave of absence. Besides we examine whether the negative impact of employment interruptions varies between mothers with different amounts of human capital in the form of vocational qualifications and between East and West Germany. Our analysis is based on data from the GSOEP (1984-2011) and controls for unobserved heterogeneity. Overall, our results show that there is no general or permanent "motherhood wage penalty", but that mainly breaks exceeding the legally suggested duration lead to lower wages, as they probably signal a low career orientation of mothers. Further, education plays a crucial role: Especially women with low secondary education and vocational training suffer from large, permanent wage penalties while other mothers suffer only from smaller, non-permanent penalties or even experience no penalties.