Exits from the workforce, not gender, at heart of 'unexplained' wage gap
Motherhood leads to significant wage losses for working women, according to a new report.
This motherhood gap in wages largely occurs because of wage penalties women experience each time they exit and re-enter the workforce for a maternity leave, found Career Interrupted: The Economic Impact of Motherhood.
"Previous studies on wage differences by gender have found that roughly half of an observed 20 per cent gender gap cannot be explained by the usual factors that drive wages, such as experience, hours worked, occupation, industry, age and the like," said Beata Caranci, deputy chief economist at TD Economics and co-author of the report.
"The research leads us to conclude that exits from the labour force, most often related to family or motherhood — not gender — are the culprit behind this 'unexplained' wage gap."
Women who exit the workforce to have children tend to experience an unexplained, but persistent, three-per-cent wage penalty per year of absence. This persistent wage penalty is up to three times more severe for frequent exits (three or more) than it is for long absences
