The hidden cost of maternity leave

The effect varies dependent upon the level of education a women has attained and the number of years in the workforce. Higher education or greater years of work experience both result in a lower average wage-penalty effect over three years.

There is little public discussion in Australia about the long-run cost incurred by women as a result of the wage-penalty effect of taking maternity leave. Because of this, the reasonably abstract concept of a wage penalty is unlikely to figure prominently in people's decisions about the duration of maternity leave they take.

It is important, therefore, that the government measure the future costs that is associated with taking maternity leave and consider the policy options available to ensure that women are not disadvantaged by taking this important initiative.

This paper uses unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The HILDA Project was initiated and is funded by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and is managed by the Melbourne Institute of Applied Economic and Social Research (Melbourne Institute). The findings and views reported in this paper, however, are those of the author and should not be

attributed to either FaHCSIA or the Melbourne Institute.