One potential explanation for lower female wages: employers fear that female employees will take maternity leave and condition wage and employment offers on that risk. I’m not saying it’s a good thing. It’s almost certainly illegal. But it’s potentially a thing employers do. My Masters student Hayden Skilling is currently investigating whether this can explain any substantial part of the unexplained gender wage gap; I’ll report on results later this year.
The likelihood of childbirth by around age 35 was reduced for every year spent in casual employment, irrespective of socioeconomic status, partner’s education and parents’ birthplace. The likelihood was reduced by 8, 23 and 35% for 1, 3 and 5 years spent in casual employment, respectively.
Now run the thing in reverse and assume rational expectations. You’re an employer. Two equally capable potential employees are up for a job. One comes with a non-trivial risk of taking maternity leave. The other is male. In case of maternity leave, you need to sort out cover and you can’t guarantee that the employee returns. So you’re taking on risk and you need to be compensated for taking on that risk.
There exists no real way for young women credibly to signal that they have no plans on having children, or that they promise to work for n years prior to any childbearing. It’s generally illegal for the employer to ask, and both the candidate and the employer knows that any promise made is unenforceable – in fact, the employer would likely get in trouble for trying to enforce it.
Again, I’m not saying any of the resulting equilibrium is in any way good or desirable. If you wish to promote gender equity, though, you have to set incentives such that good results obtain. Maternity leave mandates that are costly to employers will likely result in fewer women being given positions that draw maternity coverage. Employment subsidies proportionate to the cost of the risk imposed might socialise the costs more efficiently.
Previously: Parental Leave and Benefits.