The role of non-base compensation in explaining the motherhood wage gap: Evidence from Italy

Abstract

This paper underlines the importance of accounting for non-base compensation in explaining the motherhood wage gap. We consider two alternative measures of hourly wage using Italian EU-SILC data from 2007 to 2019: the basewage and the full-wage. The former refers to the contractual base wage, while the latter includes performance-based bonuses, productivity bonuses, commissions, pay incentives, and other extra payments. We address the endogeneity issues of motherhood and examine the effect of motherhood status across various quantiles of the wage distribution for the two hourly wage measures. Empirical findings provide evidence of a motherhood base-wage premium, which becomes nonsignificant when using the full-wage measure, suggesting that non-base compensation is a source of inequality for mothers. These findings are consistent across the wage distribution. Exploring potential heterogeneity across macro-regions and periods, we find no notable regional disparities except minor distinctions for the Southern regions, alongside a decline in the base-wage premium over time and the emergence of a full-wage penalty in recent years. A comparative analysis with a sample of men reveals that fathers enjoy a premium with both wage measures. Nevertheless, fatherhood is also associated with reduced extra remunerations, yet to a lesser extent than motherhood.