Segregation across workplaces and the motherhood wage gap: Why do mothers work in low-wage establishments?

Abstract

While maternal employment has become the norm in advanced industrial nations, gendered norms of parenting and employment disadvantage mothers in the labor force. This paper sheds new light on motherhood pay gaps by investigating the contribution of an understudied dynamic-mothers' overrepresentation in low-paying workplaces. Estimating between- and within-establishment wage gaps with nationally representative Canadian linked employer-employee data reveals that segregation in low-paying establishments accounts for the bulk of mothers' wage disadvantage relative to childless women. Pay gaps net of human capital differences are not chiefly a result of mothers' lower wages vis-à-vis similar women in a given workplace, but rather stem from the fact that mothers are disproportionately employed in workplaces that pay all employees relatively poorly. Having identified the importance of between-establishment segregation, additional analyses probe support for two theories about underlying mechanisms: compensating differentials tied to family-supportive work contexts, and discrimination. While each plays a role, evidence is strongest for discrimination, with organizational characteristics that tend to reduce opportunities for discrimination also dramatically reducing or eliminating motherhood pay gaps.