Financial Independence of Mothers upon Returning to Work

Friday, July 18, 2014: 5:45 PM
Room: Booth 42
Oral Presentation
Daniela GRUNOW , Social Sciences, Goethe-University Frankfurt am Main, Frankfurt am Main, Germany
Dana MUELLER , Federal Employment Agency at the Institute for Employment Research (IAB Nürnberg), Nürnberg, Germany
Welfare states increasingly foster policies that individualize risks over the life course. This implies that individuals, not primarily families or households, need to be able to support themselves financially throughout adulthood (financial independence). Employment interruptions and career adjustments in favor of child care have short-term and long-term consequences for an individual’s ability to maintain economic independence. In this paper we investigate German mothers’ financial independence before and after the birth of a child. In particular, we assess how long it takes for mothers to re-attain financial independence after the birth of a child. We also identify individual and group characteristics which speed up the re-attainment of economic independence upon return to employment. Empirically, we focus on employed women in the eastern and western parts of Germany who entered motherhood between 1992 and 2009. We operationalize financial independence in two ways. We first measure how long it takes for mothers until their earnings (re-)approach the minimum living wage ('Existenzminumum'). Second, we estimate the duration until mothers are back on their pre-birth earnings level. We apply event history techniques, using a novel longitudinal register data set (BASiD data). Our findings show a deep East-West-divide in the speed with which mothers re-attain financial independence. Within ten years upon staring a family, less than 25% of West German mothers have re-attained their pre-birth earnings. Just about 50% reach the minimum living wage or higher. Eastern German mothers regain financial independence much faster and at higher rates. More than 60% reach their pre-birth earnings within ten years. About 80 percent reach the minimum wage threshold. Our findings are in stark contrast with the general idea that German mothers first reenter employment part time and regain financial independence when children get older. The defining moment for re-attaining financial independence is the moment of returning to work.