Germany: Gender pay gap widens with age, particularly for academics

The gender pay gap in Germany, currently at 16% based on gross hourly wages, varies significantly depending on age and education level, according to a new study by the German Institute for Economic Research (DIW Berlin). The gap increases notably with age and is particularly pronounced among those starting a family. This trend is seen across all educational backgrounds but is most evident among university graduates, where the pay gap reaches up to 28% for those aged 45 and older. Among individuals with A levels and/or vocational training, as well as those without these qualifications, the gap is around 20%.

One factor contributing to this disparity is the correlation between higher education and increasing hourly wages with longer working hours. However, women, particularly in western Germany, are more likely to work part-time than men. The smallest gender pay gap occurs between the ages of 25 and 29, at approximately 10% across all educational groups.

Katharina Wrohlich and Fiona Herrmann analyzed data from the Socio-Economic Panel (SOEP) from 2013 to 2022 for this study. Wrohlich, head of the Gender Economics research group at DIW Berlin, emphasized that reducing the gender pay gap requires policies that promote a more equal distribution of paid work and caregiving responsibilities. She highlighted the need for tax reforms, particularly concerning the income tax splitting system for married couples and mini-job regulations, which have historically encouraged women to take on part-time or marginal employment, limiting career progression and earnings potential.

A second study examined the role of gender-specific differences in basic skills, such as reading and arithmetic, in relation to the gender pay gap. Using data from the Programme for the International Assessment of Adult Competencies (PIAAC), researchers found that while women in Germany generally have stronger reading skills, men consistently outperform them in numeracy across all age groups. However, these skill differences account for only a small portion of the wage gap.

Lavinia Kinne from DIW Berlin’s Gender Economics research group, who conducted the study alongside Jonas Jessen from the Wissenschaftszentrum Berlin für Sozialforschung (WZB) and Frauke Witthöft from the ifo Institute in Munich, emphasized the importance of addressing gender stereotypes early in education. Encouraging girls to pursue STEM subjects and boys to engage more in language studies could help create a more balanced distribution of skills and career opportunities in the long term

Source: DIW Berlin