Skill Loss during Parental Leave and Its Role for Gender Disparities in Earnings

Sonja Spitzer, Wittgenstein Centre for Demography and Global Human Capital
Claudia Reiter, Institute for Advanced Studies Vienna

This study provides a missing puzzle piece for understanding the persistent gender differences in earnings. Prior research has shown that the longer career interruptions of mothers are related to their lower income, but the mechanisms behind this link are still unclear. One explanation could be that mothers lose work-related skills during extended parental leave; however, empirical evidence for this link is missing. We aim at filling this research gap by investigating whether human capital depreciation during parental leave widens the gender disparities in earnings. The analysis is based on a longitudinal dataset for German adults, which matches administrative data on income and labour market histories with test scores on work-related skills. It allows us to investigate tested competencies of parents before and after the birth of their child, and before and after they go on parental leave. Our sample consists of 9,796 adults aged 20 to 45 between 2010 and 2022. Preliminary results suggest that the birth of a child decreases work-related skills of mothers, but not of fathers. We find no heterogeneities by birth rank, the number of births, or skill domain.The findings offer important insights for shaping parental leave policies and tackling skilled labour shortages.

Keywords: Economic Demography, Gender Dynamics, Human Capital, Education, and Work, Families, Unions and Households

See extended abstract.

  Presented in Session 27. Gender Dynamics and Demographic Shifts Over Time