Raising children can present significant financial challenges, and U.S. economist Claudia Goldin, the recipient of this year’s Nobel Prize in Economic Sciences, has conducted research shedding light on these issues, particularly the gender disparities in the labor market.

The term “child penalty” has been coined to describe the adverse consequences of parenthood, with mothers primarily bearing the brunt of these challenges, while fathers generally experience milder effects. Germany particularly exhibits this phenomenon, partly because many women rejoin the workforce on a part-time basis while continuing to perform unpaid caregiving duties at home.

Availability of childcare

Research from the Universities of Passau and Potsdam sought to investigate whether increasing the availability of childcare slots for children under three could alleviate these long-term repercussions. The hypothesis was that a swifter return to the labor market could enhance a mother’s prospects for professional advancement. However, the economists’ analysis revealed no such effect.

“Public childcare—in its current form in Germany—supports a quick return to work. But the system reaches its limits when it comes to mothers’ careers.” the researchers explain.

Using microeconometric techniques, the researchers delved into data concerning first-time mothers in western Germany who gave birth between 2005 and 2019. During this period, several family-policy reforms were implemented from 2005 to 2008, resulting in a substantial increase in childcare slots. However, the speed and extent of this expansion varied significantly among German counties, primarily due to administrative hurdles.

Regional diversity

The authors leveraged this regional diversity for their study. To draw conclusions about the impact on mothers’ career progression, the economists amalgamated data from social insurance records furnished by the Institute for Employment Research in Nuremberg with statistics from an employment survey conducted in 2018 by the Federal Institute for Occupational Safety and Health and the Federal Institute for Vocational Education and Training.

In summary, the findings are as follows:

1. Public childcare facilitates a quicker return to work for mothers after giving birth. The likelihood of re-entering the workforce within two years post-childbirth is 5.5 percentage points higher in regions with substantial childcare expansion compared to those with limited expansion.
2. Nevertheless, a majority of mothers tend to return to work on a part-time basis.
3. The availability of public childcare has a limited impact on career advancement or the likelihood of being employed in demanding roles or positions with managerial responsibilities.

The researchers also explored whether specific groups of women, such as those with higher incomes or engaged in less family-friendly professions, benefited more than others. Once again, no discernible effects were observed.