How do children matter? A comparison of gender earnings inequality for young adults in the former East Germany and the former West Germany

The former Federal Republic of Germany (West Germany) and the former German Democratic Republic (East Germany) differed sharply in their family policies. We follow 1950s and early 1960s birth cohorts from their first jobs to 1989 to see in what ways having children affected earnings for women and men. For the FRG, we find that being a parent had stronger earnings effects (positive for men and negative for women) than in the GDR, with much of this impact mediated by employment hours for women. This does not mean that having children was unimportant for women's and men's earnings in the GDR, but it indicates that the less variable life course led to more society-wide than individual-level impact. Further, in the East, some young women balanced family and employment by caking jobs below their qualifications, and this reduced their earnings.