Trend for Late Motherhood Leads to Significant Wage Losses

Parental leaves from full-time employment lead to significant wage losses in the long-run. Especially women are affected by this problem as they still assume the bigger part in child care, which requires them to suspend their professional work at least for a determined period of time.

However, wage losses are less dramatic if a woman leaves her workplace only for a short period of time and if she makes sure not to lose touch with the labour market, for example by working part-time. A current study by the Centre for European Economic Research (ZEW), Mannheim, analyses the extent of wage loss as well as the timing effect of parental leaves for German women between 30 and 55 years with at least a vocational school degree.

The results of the study show that a women’s wage rate significantly depends on her employment history. A 45-year-old woman who has been working full-time for twenty years without interruption, receives an hourly wage of DM 36.20, on average. A different picture is painted when it comes to the prototypical modern employment profile of a German mother, which is characterised by a three-year hiatus from work with a subsequent part-time employment of seven years starting at the age of 30. At 45, this woman receives an hourly wage of only DM 33.10. Compared to women of the same age in continuous full-time employment, this woman receives, on average, DM 3.10 less per hour and EUR 530 less per month. If this woman decides on a three-year hiatus from work without a subsequent part-time employment, her wage loss would be DM 1.20 per hour. If the woman delays her hiatus by five years and takes her temporary leave from work as late as at 35, her expected hourly wage merely amounts to just above DM 33 (see third bar), which equals the wage she would receive after a ten-year hiatus from full-time employment. The timing concerning phases of employment and parental leave is therefore crucial: the later the hiatus, the higher the risk of a human capital write-off. Wage losses are lowest if women take on a two-year part-time employment after a one-year hiatus. In this case, the wage loss merely amounts to EUR 0.30 per hour and slightly more than EUR 100 per month as compared to a woman in continuous full-time employment.

Contact

Professor Dr Miriam Beblo, E-mail: beblo@zew.de

Professor Dr Elke Wolf, E-mail: wolf@zew.de