Loss of Income Study: Mothers Earn Much Less Than Thought

According to a study in Germany, the loss of income for mothers after the birth of their first child is significantly greater than previously assumed. In the fourth year after giving birth, mothers earn an average of almost 30,000 euros less than women of the same age without children, according to the study by the Mannheim Center for European Economic Research (ZEW) with Tilburg University. This was available to the Reuters news agency in advance on Friday. Previous estimates were around 20,000 euros.

“If women under 30 become mothers for the first time, on the one hand they suffer losses in their current income. On the other hand, they also miss important career steps in the particularly formative early career phase with corresponding consequences for their future careers,” said study co-author Lukas Riedel from the ZEW research group “Inequality and Distribution Policy.” Women who had children at a later date would have already gone through this phase with often high wage growth and established themselves in the labor market. That is why they recorded greater losses in income levels in absolute terms, for example due to reduced working hours. “In the long term, however, they are better able to resume their careers after the birth,” said Riedel. “The losses after the first birth develop differently for mothers of different ages.”

Loss of income for mothers after their first birth is referred to in economic research as the “child penalty”. The ZEW study uses official data from over 186,000 mothers from the “Sample of Integrated Labor Market Biographies” that were collected between 1975 and 2021. In the usual method, however, the losses are estimated using so-called event studies, according to the ZEW. If the age at first birth were excluded, mothers would be compared with mothers, even though both groups had already experienced the effects of the birth on their income.

For reliable results, however, mothers would have to be compared with women of the same age who do not have children. “Our estimation method only uses clean comparisons with women of the same age who have not yet had a child,” said co-author Valentina Melentyeva from Tilburg University in the Netherlands. In this way, the income development in the case of no birth can be realistically depicted and the more advanced careers of older mothers can be taken into account. “This approach not only allows us to estimate the loss of income after childbirth depending on the age of the mothers,” said Melentyeva. “In addition, different causes for the salary differences can be analyzed.”