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European Estimates of the Family Gap in Pay : Evidence from the ECHP , BHPS and GSOEP

Despite educational expansion, rising female labour force participation and equal opportunities policies, women’s primary responsibility for children and the home have remained unchanged. The aim of this paper is to identify whether there is a penalty in pay associated with motherhood for women within Europe and whether these ‘family gaps’ in pay can be explained by differences in the characteristics of mothers compared to women without children. The first stage of the analysis utilises pooled cross sections of data from Waves 1 to 5 of the ECHP. This analysis reveals that women who became mothers before the age of 25 exhibit larger family gaps in pay and that this gap increases with the number of children present. These penalties in pay associated with motherhood are in addition to the impact of education and labour market experience. Comparing results across countries, it is within Germany and the UK where the largest family gaps in pay were shown to exist. Several weaknesses of the ECHP data cast doubt as to whether these estimates reflect the true size of the family gap in pay. To address these concerns, we use data from the British Household Panel Survey (BHPS) and the German Socio-Economic Panel (GSOEP) to test the robustness of the ECHP results and to bring additional insights into the reasons behind the family gaps in pay in these countries. Analysis of these national panels confirms the presence of significant family gaps in pay within these countries. Our analysis for Germany and the UK reveal that career breaks associated with family formation contribute towards lower earnings growth and that unobserved heterogeneity is of some importance in the German sample, but less so for the UK. We conclude with a discussion of how differences institutional structures across countries that support the combination of paid work and caring tasks may contribute to the observed family gaps in pay. 1 Work undertaken as part of the Female Employment in National Institutional Contexts (FENICs) research programme funded by the European Commission under the 5th Framework Programme. Access to the ECHP was gained during a research visit to the Centre for Demographic Studies at the Autonomous University of Barcelona during September 2002.