Parenthood wage penalties in a double income society
Sara Cools and Marte Strøm
Picture: Springer Link
Review of Economics of the Household 2014 12 (1)
We estimate how parenthood affects hourly wages using panel data for Norwegian employees in the years 1997–2007. Though smaller than for most other OECD countries, we find substantial wage penalties to motherhood, ranging from a 1.2 % wage reduction for women with lower secondary education to 4.9 % for women with more than four years of higher education. Human capital measures such as work experience and paid parental leave do not explain the wage penalties, indicating that in the Norwegian institutional context, mothers are protected from adverse wage effects due to career breaks. We do however find large heterogeneity in the effects, with the largest penalties for mothers working full time and in the private sector. Contrary to most studies using US data and to previous research from Norway, we find a small wage penalty also to fatherhood. Also for men, the penalty is greater for those who work full time and in the private sector. A substantial share of the fatherhood wage penalty is explained by paternity leave.