Better news: smart policy can help! In 2007, Germany overhauled parental leave (introducing Elterngeld) to encourage quicker returns to work. It worked – the long-run motherhood penalty fell by ~5–10%, helping to stop the gender gap from growing further.

Policy matters: 1979–1992, Germany expanded paid parental leave from 2 months to 36 months! Well-intended, but longer breaks kept moms out of work. We find these reforms alone explain ~1/3 of the rise in child-related gender inequality over that period.

📈 Particularly, the 'motherhood penalty' has ballooned over time. In the 1960s, 10 years after having a child, a German mother's earnings were ~35% lower than if she never had kids. By the 2000s, due to children, moms' earnings were ~60% lower a decade after birth.

Drivers of the increase: Fewer women having kids (✅ small gap reduction), bigger child penalty (❌ gap widens), higher moms' earning potential (❌ gap widens). The last two forces dominate, causing child-related inequality to surge.

🚨 New #Publication: We tracked how policy and parenthood reshaped gender inequality in Germany from the 1960s to today. In early decades, only 14% of the gender gap was due to kids—now it's 64%.

How did children become the biggest factor? Thread🧵

🧑‍🤝‍🧑 with Hansen, @dominiksachs.bsky.social & Lüthen