Moms Need More Government Provision
Women’s career prospects have improved, however, the gender pay gap still persists, and one crucial component as to why women on average earn lower wages than men is parenthood, says Florida Atlantic University Business Professor Suman Ghosh.
“Different regions of the world have tried to combat this issue with family friendly policies offering mothers support when returning to work after giving birth” says Ghosh. “My fellow researchers and I have found evidence of the positive impact of family friendly policies on women’s careers in firms through government-provided childcare.”
In order to study the impact of government provided childcare on women’s careers, Ghosh and his team used a unique employer-employee matched data set from Germany, where childcare provision is sponsored by the government and there are no direct costs of providing child care for firms.
What they found was that government-provided childcare has a significant positive impact on wages of women and thus decreases the gender pay gap.
They found that an increase of 10 percent in childcare provision reduces the gender pay gap by 26 to 28 percent. The effect on mothers is 2 to 3 times larger than the baseline effect on women.
Additionally, mothers in countries with more childcare provision experience larger wage changes that are likely associated with promotions.
They also found that women with small children or several children; women in the highest wage bracket; and women with higher education degrees are more likely to experience these benefits. Lastly, their research concluded women in areas with more childcare provision are less likely to drop out of the workforce after giving birth.
“Our results suggest that childcare provision significantly impacts the career of women and particularly mothers, in terms of higher wages and also the upward trajectory of their careers,” explains Ghoush.
The positive impact of childcare provision on women’s careers results in a larger pool of qualified women firms can draw from, he says, adding that the assumed negative stock market reaction to mandated gender quotas is mitigated for firms located in regions with high government provided child care.
Suman Ghosh is a professor of economics and Stone Fellow at Florida Atlantic University’s College of Business. The opinions expressed in this article are those of the author and do not reflect or represent the opinions of Florida Atlantic University.