Money and Babies
Gender pay gaps persist in high-income countries and beyond. Having children, in particular, seems to be one of the main factors dividing the careers of women and men. Mothers who return to work after giving birth often face substantial wage losses, whereas fathers have been found to enjoy modest wage gains after the birth of a child. However, most studies have overlooked whether such wage premiums have changed over time amid transformations in the policy context surrounding fatherhood. Also, we still lack a full understanding of “what kind of men” become fathers and which do not.
To fill in these research gaps, Gabriele Mari (Erasmus University Rotterdam) analysed the wage trajectories of men in the UK and Germany over the last three decades, before and after becoming fathers. As a general trend in both countries, women and men increasingly postpone parenthood to spend more time in education and find firm footing in the labour market. Both countries, and Germany in particular, have also changed their policy approach to fatherhood in the 2000s, mainly by granting paternity and parental leave rights to new fathers. Mari used data from the British Household Panel Survey (BHPS), the UK Household Longitudinal Survey (UKHLS), and the German Socio-Economic Panel (SOEP). In these surveys, the same respondents are followed over time, making it possible to study how the wage rates of men change when they become fathers, and compare such wage trajectories to those of men who will never or have yet to experience fatherhood.
The study finds that men who become fathers are not just those with higher earning potential relative to childless men, but men who experience superior wage growth leading up to fatherhood. Fathers are thus not rewarded with a wage premium, but rather men whose earnings increase at a particularly steep rate are more likely to become fathers in the first place. This holds especially true for men born in more recent decades, who experience fatherhood later in life and in the context of policies that, to an extent, emphasise the role of men as carers rather than just providers.
Concerning gender pay gaps, the results presented in the study question whether wage premiums for fathers efficiently compensate the wages typically lost by their female partners. Where market mechanisms fail, policies can help achieve such compensation. While this study did not explicitly evaluate leave policies, further expansions of paternity and parental leave policies, for example, might indeed mitigate economic and career losses for mothers. Allowing for longer periods of leave for fathers could ease the burden of early childcare on mothers and help them maintain strong ties to the labour market. Further, policymakers could evaluate making such leave periods available to more fathers, for example by increasing replacement rates. If taking paternity leave became the new normal, perhaps men would not perceive or experience penalties at work due to their family commitments. This study shows that fathers at least will have no wage premium to lose.
More information and replication materials here: https://osf.io/6rngh/.