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The wage effects of entering motherhood: a within-firm matching approach

  • Beblo, Miriam
  • Bender, Stefan
  • Wolf, Elke
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    We analyze the wage effects of employment breaks of women entering motherhood using a novel within-firm matching approach where mothers? wages upon return to the job are compared with those of their female colleagues within the same firm. Using an administrative German data set we investigate three different matching procedures based on information two years before birth: (1) exact matching on individual characteristics, (2) propensity score matching and (3) a combined procedure of exact and propensity score matching. Our results yield new insights into the nature of the wage penalty associated with motherhood, since we find first births to reduce women?s wages by 16 to 19 percent, regardless of the matching procedure applied. Neglecting the firm identifier and matching across all firms, however, yields a wage cut of 30 percent. Furthermore, we can show that the wage loss increases with the duration of the employment break.

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    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 06-53.

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    Date of creation: 2006
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    Handle: RePEc:zbw:zewdip:5447
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    1. Lundberg, Shelly & Rose, Elaina, 2000. "Parenthood and the earnings of married men and women," Labour Economics, Elsevier, vol. 7(6), pages 689-710, November.
    2. 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.
    3. Kunze, Astrid & Ejrnæs, Mette, 2004. "Wage Dips and Drops around First Birth," IZA Discussion Papers 1011, Institute for the Study of Labor (IZA).
    4. 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.
    5. Joshi, Heather & Paci, Pierella & Waldfogel, Jane, 1999. "The Wages of Motherhood: Better or Worse?," Cambridge Journal of Economics, Oxford University Press, vol. 23(5), pages 543-64, September.
    6. Miriam Beblo & Elke Wolf, 2002. "How much does a year off cost? Estimating the wage effects of employment breaks and part-time periods," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 45(2), pages 191-217.
    7. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Universite de Montreal, Departement de sciences economiques.
    8. Michael Lechner, 2002. "Program Heterogeneity And Propensity Score Matching: An Application To The Evaluation Of Active Labor Market Policies," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 205-220, May.
    9. Polachek, Solomon William, 1981. "Occupational Self-Selection: A Human Capital Approach to Sex Differences in Occupational Structure," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 60-69, February.
    10. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
    11. 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.
    12. Gartner, Hermann, 2005. "The imputation of wages above the contribution limit with the German IAB employment sample," FDZ Methodenreport 200502_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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