No. 47




Impact of Family Benefits on Gender Pay Gap

07 June 2023


RiTo No. 47, 2023

The purpose of this research is to shed light on how family policy affects the gender wage gap in Estonia.

To date, empirical studies have not assessed the role of parenthood in Estonia, the European country with the most generous parental policy but the largest gender wage gap. The gender pay gap is caused by the cumulative effect of many factors over a woman’s life, including the difference in treatment in the labour market in comparison to her male counterparts. The motherhood penalty is estimated using the Estonian Labour Force Survey (2009-2019), the Oaxaca-Blinder decomposition method, and Unconditional Quantile Regression. The findings highlight a motherhood penalty of nearly 14% and a fatherhood premium of 4%, with both outcomes contributing to the widening of the gender wage gap. The results also show that the motherhood gap is greater at the bottom of the wage distribution. Our findings should spark further debate about gender equality, reintegrating mothers into the labour force, and providing fathers with non-transferable parental leave.