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Miriam Beblo, Stefan Bender, Elke Wolf, Establishment-level wage effects of entering motherhood, Oxford Economic Papers, Volume 61, Issue suppl_1, April 2009, Pages i11–i34, https://doi.org/10.1093/oep/gpn040
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Abstract
We analyse the wage effects following employment breaks of women who enter motherhood using a novel matching approach where mothers’ wages upon return to work are compared to those of their female colleagues within the same establishment. Using an administrative German data set, we apply a fixed-effects propensity score matching based on information two years before birth of the first child. Our results yield new insights into the nature of the wage penalty associated with motherhood: when matching with establishment-specific effects we find that first births reduce women's wages by 19%, whereas ignoring the identifier and matching across all establishments would yield a wage cut of 26%. We therefore conclude that selection into establishments is an important explanatory factor for the family pay gap.