The Motherhood Wage Penalty: Sorting Versus Differential Pay

The motherhood wage penalty is today probably the largest obstacle to progress in gender equality at work. Using matched employer-employee data from Norway (1980–97), a country with public policies that promote combining family and career, we investigate (a) whether the penalty arises from differential pay by employers or from sorting of employees on occupations and establishments, and (b) changes in the penalties over time in a period with major changes in family policies. The findings are as follows. (1) There are major wage penalties to motherhood, but these declined strongly over the 18–year period, likely caused by changes in family policies and in how families operate. (2) The penalty to motherhood is mostly due to sorting on occupations and occupation-establishment units. By 1995–97, mothers and nonmothers working in the same occupation-establishment unit were paid same wages. (3) Women who become mothers are wage wise positively selected, but the premia are wiped out by the negative effects of actual motherhood. (4) For wage growth, there were premia to motherhood in 1980–89, but none by 1990–97. In conclusion, the motherhood penalty is not due to employers paying mothers lower wages and its size appears sensitive to changes in family policies, with large reductions in penalties over time.