Whilst gender inequality has been falling in the developed world, child-related gender inequality in pay has stayed constant. In this paper I use German panel data spanning across 33 years from 1984 until 2017 including over 50,000 individuals. The main contribution of this paper is the analysis of the effect of parenthood on women’s and men’s earnings using propensity score matching. I estimate the annual average treatment effect of parenthood over the 20 years following the birth of the ﬁrst child to be -10500€ for women and +6800€ for men. When comparing the percentage loss of potential earnings, I ﬁnd that women suffer a long-run child penalty of 63% compared to men. I then examine the relationship between the treatment effect and gender norms, willingness to take on risk for your career and priorities regarding job characteristics. There exists evidence which suggests that all of these factors are associated with changes in the individual treatment effects.
Keywords: Gender Economics, Child Penalty, Propensity Score Matching