Labour market theory provides several reasons why mothers are likely to earn lower
hourly wages than non-mothers. However, the size of any motherhood penalty is an
empirical matter and the evidence for Australia is limited. This paper examines the
effect of motherhood on Australian women’s wages and wage growth using a series of
panel-data models which control for other relevant factors, both observed and
unobserved. Using data from the Household, Income and Labour Dynamics in Australia
(HILDA) survey, an unexplained motherhood wage penalty of around four per cent for
one child, and eight per cent for two or more children, is found. Further analysis
suggests that the wage penalty emerges over time through reduced wage growth, rather
than through an immediate wage decline after the birth of a child. This reduction in
wage growth is consistent with discrimination but also with a reduction in mothers’
work effort.