The Gender Wage Gap Opens Long before Motherhood : Panel Evidence on Early Careers in Switzerland

Abstract

According to a popular argument in economics, the gender wage gap persists not because of employer discrimination against women, but because of the differential investment of fathers and mothers into paid work and the household. We test this argument by comparing the evolution of wages between men and women before the onset of family formation and gendered household specialization. We use a cohort study of young adults for Switzerland (TREE 2000–2014) and match the two sexes on their intellectual ability and educational attainment before they enter the labour market. We then use the ensuing survey waves to account for human capital and job characteristics as well as for values towards work and family. We replicate our analysis with a second panel study of Swiss graduate students. We find in both cohort studies an unexplained gender wage gap of between 3 to 6 percent in favour of men. This result suggests that young women earn lower wages than young men with the same productive characteristics long before they have children. Translated into annual wages, this means that young women lose out on half a monthly wage each year in comparison to young men.