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Estimating the wage penalty for maternal leave

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Author Info

  • Buligescu Bianca
  • Crombrugghe Denis de
  • Mentesoglu Gülcin
  • Montizaan Raymond

    (ROA rm)

Abstract

The focus of this paper is the size of the wage penalty due to maternal leave incurred by working mothers in Germany. Existing estimates suggest two-digit penalties of up to 30 percent, with very little rebound over time. We apply recent panel data methods designed to address problems of sample selectivity, unobserved heterogeneity and endogeneity to German Socio-Economic Panel (GSOEP) data. The selectivity issue arises because no wage is observed for employees who are on leave. Heterogeneity takes the form of unobserved individual effects correlated with explanatory variables. Endogeneity is due to the simultaneity of the wage and participation outcomes. Heckman’s classic treatment of selectivity requires extensions to deal with both heterogeneity and simultaneity. We present an extension for the case of a censored tobit participation model and use it to exploit the actual working hours data available in GSOEP. We also investigate the sensitivity of the results to the choice of method. Our estimates imply a wage penalty due to maternal leave which although substantial remains below previous estimates. Furthermore, we find that this penalty is less persistent than other studies suggest. Five years after the career interruption mothers seem to have caught up.

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Bibliographic Info

Paper provided by Maastricht University, Research Centre for Education and the Labour Market (ROA) in its series ROA Research Memorandum with number 005.

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Date of creation: 2008
Date of revision:
Handle: RePEc:unm:umaror:2008005

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Postal: P.O. Box 616, 6200 MD Maastricht
Phone: 043-3883647
Fax: 043-3210999
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Web page: http://www.maastrichtuniversity.nl/
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Related research

Keywords: education; training and the labour market;

References

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  1. Datta Gupta, Nabanita & Smith, Nina, 2002. "Children and Career Interruptions: The Family Gap in Denmark," Economica, London School of Economics and Political Science, vol. 69(276), pages 609-29, November.
  2. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  3. Beblo, Miriam & Bender, Stefan & Wolf, Elke, 2006. "The wage effects of entering motherhood : a within-firm matching approach," IAB Discussion Paper 200613, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  4. Kunze, Astrid & Ejrnæs, Mette, 2004. "Wage Dips and Drops around First Birth," IZA Discussion Papers 1011, Institute for the Study of Labor (IZA).
  5. Waldfogel, Jane, 1998. "The Family Gap for Young Women in the United States and Britain: Can Maternity Leave Make a Difference?," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 505-45, July.
  6. Davies, Rhys & Pierre, Gaelle, 2005. "The family gap in pay in Europe: a cross-country study," Labour Economics, Elsevier, vol. 12(4), pages 469-486, August.
  7. 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.
  8. Beblo, Miriam & Bender, Stefan & Wolf, Elke, 2006. "The wage effects of entering motherhood: a within-firm matching approach," ZEW Discussion Papers 06-53, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. Lars Skipper & Marianne Simonsen, 2006. "The costs of motherhood: an analysis using matching estimators," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 919-934.
  10. Lundberg, Shelly & Rose, Elaina, 2000. "Parenthood and the earnings of married men and women," Labour Economics, Elsevier, vol. 7(6), pages 689-710, November.
  11. 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.
  12. Beblo, Miriam & Wolf, Elke, 2002. "Wage Penalties for Career Interruptions: An Empirical Analysis for West Germany," ZEW Discussion Papers 02-45, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  13. Albrecht, James W. & Edin, Per-Anders & Sundström, Marianne & Vroman, Susan B., 1996. "Career Interruptions and Subsequent Earnings: A Reexamination Using Swedish Data," Working Paper Series 1996:23, Uppsala University, Department of Economics.
  14. repec:iza:izadps:dp509 is not listed on IDEAS
  15. 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.
  16. Ekaterini Kyriazidou, 1997. "Estimation of a Panel Data Sample Selection Model," Econometrica, Econometric Society, vol. 65(6), pages 1335-1364, November.
  17. Deborah J. Anderson & Melissa Binder & Kate Krause, 2002. "The Motherhood Wage Penalty: Which Mothers Pay It and Why?," American Economic Review, American Economic Association, vol. 92(2), pages 354-358, May.
  18. Stefan Bender & Annette Kohlmann & Stefan Lang, 2003. "Women, work, and motherhood: changing employment penalties for motherhood in West Germany after 1945 - a comparative analysis of cohorts born in 1934-1971," MPIDR Working Papers WP-2003-006, Max Planck Institute for Demographic Research, Rostock, Germany.
  19. Dustmann, Christian & van Soest, Arthur, 1998. "Public and private sector wages of male workers in Germany," European Economic Review, Elsevier, vol. 42(8), pages 1417-1441, September.
  20. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  21. Wooldridge, Jeffrey M., 1995. "Selection corrections for panel data models under conditional mean independence assumptions," Journal of Econometrics, Elsevier, vol. 68(1), pages 115-132, July.
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Cited by:
  1. Fernández-Kranz, Daniel & Rodríguez-Planas, Núria, 2009. "The Part-Time Pay Penalty in a Segmented Labor Market," IZA Discussion Papers 4342, Institute for the Study of Labor (IZA).

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