The struggle to reduce the “motherhood penalty”

THE “MOTHERHOOD PENALTY”—the sharp decline in earnings that women suffer after giving birth—is one of the principal causes of the gender pay gap. It often locks women into lower incomes for the rest of their careers.

Governments around the world have sought ways to reduce the opportunity cost of having children, and that cause it to be shared more evenly between men and women. A new working paper examines the impact of the introduction of paid maternity leave in Switzerland 15 years ago. It is a rare comprehensive study of the impact of such policies. It finds that the policy did appear to shrink the motherhood penalty—but by a disappointingly small amount.

In September 2004 Swiss voters approved in a referendum a new law that required the government to pay mothers 80% of their previous salary for 14 weeks after giving birth, up to a cap of SFR196 ($196) per day. The benefit is funded by a tax on payrolls of 0.45%, split equally between employers and workers. It also protects women against losing their jobs for 16 weeks after their babies are born. Eligibility requirements are strict. To qualify, women must have worked for at least five months of their pregnancy, and still hold a paid job on the day they give birth. Nonetheless, the law’s passage made Switzerland the last country in Western Europe to guarantee paid maternity leave, and left the United States as the world’s only high-income economy without such a policy.

The policy has had modest success. The working paper compares mothers' average wages before and after the introduction of paid maternity leave. Surprisingly, the study found that maternity leave actually reduced first-time mothers’ average earnings by 4% one year before giving birth. However, it also led to a faster recovery in salaries, such that mothers’ wages four years after giving birth were 2% higher than they had been before the policy was enacted.

The authors propose one benign explanation for the apparent negative pre-natal impact on earnings: the introduction of maternity leave could have led some women to join the labour force in low-paid jobs before pregnancy, so lowering average earnings. Nonetheless, the overall post-natal impact of the law, although positive, seems surprisingly small. Previous research from Nordic countries suggests that better paternity leave and a change in social norms regarding the division of child-rearing and housework can help narrow the gap, for instance, by allowing women to return to work sooner and so suffer a shorter interruption to their careers. Men might need to work harder at home, so that mothers can draw level at work.