Gender Differences in Lifetime Income. The Role of Education and Career Breaks

This study examines the influence of educational decisions on lifetime earnings of men and women, focusing on the role of career breaks (particularly in the form of unemployment and parental leave) and children. It becomes clear that the lifetime earnings of men and women differ significantly and that different educational paths and career breaks play an important role.

First, the results of the previous study (Brändle et al., 2019) are updated. When analyzing gender differences in returns to education, it becomes clear that men have a significantly higher lifetime income than women. This difference becomes even greater when there are children in the household. The multivariate analyzes show lower educational returns than the descriptive analyses, since higher educational qualifications are positively controlled with factors that also have a positive influence on income. As a result, the educational returns to university studies are positive only late in life and are only statistically significant for men. There tends to be lower returns to education for women, particularly when considering the first educational decision.

The role of career breaks is analyzed separately by showing the existence of children in the household and the frequency or duration of certain career breaks broken down by educational path and gender. It turns out that education protects against unemployment. People without a qualification, especially men, are unemployed much more frequently or longer than people with a qualification. Further analyzes show that the differences in the risk of unemployment and the duration of unemployment between people with vocational training and university degrees are only small. This is due to the fact that university dropouts are unemployed more frequently or for longer periods, and those who have climbed the educational ladder less frequently or for shorter periods of time, and these two groups are allocated differently depending on the definition.

When considering parental leave, it should be noted that women without a degree and women with vocational training take parental leave much more often and much earlier than women with master craftsman or technicians and women with a university degree.

If you take all career breaks together, then by taking education episodes into account, people with master craftsman/technician degrees do particularly well because they have a shorter duration of unemployment and, in addition, their education episodes are not as long as people with university degrees. Overall, people with a university degree are employed for less time than people with vocational training.

Final report (in German)