The rate of decrease in wages of women after the birth of their first child is 28%

The "mothers' fine" of non-Haredi women in Israel, meaning that their rate of decrease in wages after the birth of their first child is 28%. In the Arab population there is no maternity fine but a "marriage fine" and it is much higher and stands at 35%. However, the maternity fine in Israel is significantly lower than in Germany, the United Kingdom and the United States. This emerges from a survey published today by Chief Economist Shira Greenberg.
In Israel, the employment rate of women is high, so the gender gap is much more pronounced in wages than in employment. The gap between men and women in the employment rate stands at 7.7 percentage points and is relatively low compared to the OECD average (13.3 percentage points). On the other hand, the wage gap is 22.7% for full-time employees, and is double the 12.4% average of developed countries. 60% of this gap is explained by a lower job volume and 30% by the choice of employment industry.
According to a scenario calculated by the Ministry of Finance, a gradual reduction of 40% of the gap between men and women is expected to lead to an increase of NIS 34 billion in GDP in 2030 and of NIS 91 billion in 2040 compared to the usual business scenario (slow reduction). However, a corresponding decrease in the income of men, for example due to their transition to less lucrative employment sectors or a decrease in the percentage of managers among them, may offset some of the increase.
In Israel, the annual income from work of non-Haredi Jewish women decreases sharply immediately with the birth of the first child and even a decade later is about 28% lower than for men as a result of entering parenthood. In the first year after giving birth there is a 30% decrease in wages and after ten years a gap of 27% is still maintained between them and the men. The maternity fine in Israel explains about half of the gender gap in income from work. Among other things, there is a phenomenon that women leave the high-tech industry that brings in after the birth of their first child.
Due to the high employment rate, the maternity fine in Israel is mainly due to a decrease in the number of women's jobs after the birth of their first child and less due to leaving the labor market. In addition, after the birth of the first child, the data indicate that women choose to work at higher rates in their area of ​​residence. Nine years after the birth of the first child, the (employed) women are 12% more likely to work in their area of ​​residence compared to the year before entering parenthood, while among fathers there is no change. Of course, the choice to work close, limits the options and may hurt their wages.
Despite the very high fertility rate in Israel, the maternity fine of non-Haredi Jewish women in Israel is not high relative to developed countries. In Germany, the mothers' fine after a decade stands at 61%, in the UK at 44%, compared to 28% in Israel. In Sweden, on the other hand, it stands at only 26% and in Denmark at 21%.
In Arab society the gender gap opened up significantly in the year of marriage, before the birth of the first child. The "marriage fine" of Arab women in relation to Arab men is 35%, higher than the mother fine among non-Haredi Jewish women (28%). Among Arab women, most of the harm to income from work after marriage stems from leaving the labor market, and not from a reduction in the number of jobs. This phenomenon reinforces the hypothesis that gender gaps in the labor market also stem from cultural perceptions.
The Ministry of Finance claims that according to studies, the most effective tool for reducing the gender gap and increasing the employment rate and working hours of women is subsidizing day care centers for families from weak backgrounds where both parents work.