Abstract

We analyze the wage effects of employment breaks of women entering motherhood using a novel within-firm matching approach where mothers wages upon return to the job are compared with those of their female colleagues. We investigate three different matching procedures: (1) exact matching on individual characteristics two years before birth, (2) propensity score matching and (3) a combined procedure of exact and propensity score matching. In a subsequent regression analysis on the wage differences of the matched pairs we find heterogeneous treatment effects. Our results yield new insights into the nature of the wage penalty associated with motherhood. We plan to extend the analysis to an evaluation of the policy effects of several extensions of the parental leave period in Germany.