Is There a Fatherhood Wage Premium?

Objective: This study examines whether fatherhood sparks the wage attainment of men or rather entry into fatherhood is simply more typical for high-earning men and at times of wage growth during the career cycle. Background: Fatherhood premiums may contribute to gender economic inequalities, particularly in countries with strong male-breadwinner legacies such as Germany and the United Kingdom. Yet, as male-breadwinner norms have waned and policies have started fostering men's role as carers, wage premiums could be a thing of the past. Also, the mechanisms usually invoked to account for fatherhood premiums—effort allocation, couple specialization, and employer discrimination—seem of little relevance even in these countries. Entry into parenthood spurred by wage attainment is therefore scrutinized as an alternative source of the apparent premiums on average and across cohorts. Method: The author uses long-running panel data for both countries and three regression-based approaches (pooled ordinary least squares, fixed effects estimation, and fixed effects individual-slope estimation). Results: Overall, fatherhood wage bonuses could not be detected on average as well as across birth cohorts. At best, estimates were compatible with modest premiums among older cohorts of men. Positive selection on both prior wage levels and wage growth was found to be largely responsible for the apparent wage boost. The contribution of selection on prior wage levels though has been fading across cohorts, meaning that men select into fatherhood less and less on the basis of time-invariant characteristics positively related to both wages and the chance of becoming a father. Conclusion: The link between fatherhood and wages appears to be more of a selection story than a causal one, even in contexts with strong male-breadwinner legacies.

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