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The Effect of Maternity Leave on Women's Pay in Germany 1984-1994

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  • Jan Ondrich
  • Katharina C. Spieß
  • Qing Yang
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    Abstract

    In 1986 German federal parental leave and benefit policy was expanded in several ways, extending the potential duration of leave from six to ten months and paying child-rearing benefits to all new mothers regardless of their employment status before childbirth. The potential duration has increased four times since 1986 and stood at 18 months in 1991 and three years starting in 1992. This study uses log-wage difference regressions to examine the effect of leave taken by the mother on wage growth for two 5-year periods, 1984-1989 and 1989-1994. In each of the fiveyear periods, taking maternity leave was found to have a significant negative effect on wage growth. Point estimates imply that each month of maternity leave reduced wage growth by 1.5 percent over five years. In addition, for the second five-year period only, mothers experienced lower wage growth if they chose to stay at home rather than return to work when the allowable leave period expired: from 1989 to 1994, a half-year out of the labor force after the end of the leave period lowered wage growth by an additional 15 percent over five years.

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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.38497.de/dp289.pdf
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    Bibliographic Info

    Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 289.

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    Length: 25 p.
    Date of creation: 2002
    Date of revision:
    Handle: RePEc:diw:diwwpp:dp289

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    References

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    1. Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-41, June.
    2. Elke Holst & Jürgen Schupp, 2001. "Erwerbsverhalten von Frauen: Trotz Annäherung immer noch deutliche Unterschiede zwischen Ost und West," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 68(42), pages 648-658.
    3. Patricia M. Anderson & Bruce D. Meyer, . "The Incidence of a Firm-Varying Payroll Tax: The Case of Unemployment Insurance," IPR working papers 95-23, Institute for Policy Resarch at Northwestern University.
    4. Rosenschon, Astrid, 2001. "Familienförderung in Deutschland: Eine Bestandsaufnahme," Kiel Discussion Papers 382, Kiel Institute for the World Economy (IfW).
    5. Kostas G. Mavromaras & Helmut Rudolph, 1997. "Wage Discrimination in the Reemployment Process," Journal of Human Resources, University of Wisconsin Press, vol. 32(4), pages 812-860.
    6. Hausman, Jerry A & Wise, David A, 1977. "Social Experimentation, Truncated Distributions, and Efficient Estimation," Econometrica, Econometric Society, vol. 45(4), pages 919-38, May.
    7. Poirier, Dale J & Melino, Angelo, 1978. "A Note on the Interpretation of Regression Coefficients within a Class of Truncated Distributions," Econometrica, Econometric Society, vol. 46(5), pages 1207-09, September.
    8. Jacob Mincer & Solomon Polachek, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 76-110 National Bureau of Economic Research, Inc.
    9. Mary Corcoran & Greg J. Duncan & Michael Ponza, 1983. "A Longitudinal Analysis of White Women's Wages," Journal of Human Resources, University of Wisconsin Press, vol. 18(4), pages 497-520.
    10. Christopher J. Ruhm, 1996. "The Economic Consequences of Parental Leave Mandates: Lessons from Europe," NBER Working Papers 5688, National Bureau of Economic Research, Inc.
    11. Beblo, Miriam & Wolf, Elke, 2000. "How much does a year off cost? Estimating the wage effects of employment breaks and part-time periods," ZEW Discussion Papers 00-69, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. Jacob Mincer & Solomon Polacheck, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 397-431 National Bureau of Economic Research, Inc.
    13. Gert G. Wagner & Jürgen Schupp & Ulrich Rendtel, 1991. "Das Sozio-ökonomische Panel - Methoden der Datenproduktion und Aufarbeitung im Längsschnitt," Discussion Papers of DIW Berlin 31, DIW Berlin, German Institute for Economic Research.
    14. Goldberger, Arthur S., 1981. "Linear regression after selection," Journal of Econometrics, Elsevier, vol. 15(3), pages 357-366, April.
    15. Jacob Mincer & Haim Ofek, 1982. "Interrupted Work Careers: Depreciation and Restoration of Human Capital," Journal of Human Resources, University of Wisconsin Press, vol. 17(1), pages 3-24.
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    Cited by:
    1. Olivier Thévenon & Angela Luci, 2012. "Reconciling Work, Family and Child Outcomes: What Implications for Family Support Policies?," Population Research and Policy Review, Springer, vol. 31(6), pages 855-882, December.

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