The Long Way to Gender Equality: Gender Pay Differences in Germany, 1871-2021
- From Sonja Hennen
- Reading duration 4 min
Germany is still grappling with one of the highest gender earnings gaps in Europe. In contrast to the EU average of 13%, Germany's gross hourly earnings display an unadjusted gender gap of 18%. While the gender pay debate has gained momentum in academic and policy circles, few studies explore this issue from a long-run perspective. In a new World Inequality Database paper, Theresa Neef closes this research gap by providing the first time series of the gender earnings ratio (defined as the share of women’s average gross hourly earnings in comparison to men’s) for the full-time employed workforce in Germany since the 1870s and comparing it with Sweden and the United States.
To date, Claudia Goldin’s work (1990) on the long-run development of the gender earnings ratio in the United States from more than 30 years ago is still the benchmark for understanding gender earnings differences since industrialization. This paper adds to this strand of work by identifying key factors influencing pay equality over the years, the institutional and economic conditions that increase women’s education and whether they translate into more pay equalization.
The analysis spans five distinct periods, each characterized by varying environments for female employees and the valuation of their work:
• Rapid Industrialization (1871-1913): Slow advances in the gender earnings ratio due to delayed inclusion of women in the industrial workforce.
• World War I and the Weimar Republic (1914-1933): Giant leaps towards earnings equality, with the gender earnings ratio increasing from 47% in 1913 to 58% in 1937. Progressive institutions and increased women's education played pivotal roles.
• Nazi Reign (1933-1945): Mixed developments as married women were initially urged to leave the labor market, only to be later demanded in the industrial workforce during rearmament.
• Postwar Period (1949-1990): Slower growth in the gender earnings ratio but a growing participation rate due to the reentry of married women into the labor market. Divergent trends compared to Sweden and the United States.
• Post-Reunification Period (Since 1990): Merging two countries with different wage levels, gender earnings ratios, and skill sets.
Neef finds that the industrialization period in Germany since the 1870s yielded slow advances in the gender earnings ratio due to women’s delayed inclusion in the industrial workforce. In contrast, the first half of the 20th century, from 1913 to 1937, exhibited giant leaps towards earnings equality. During this time, the gender earnings ratio increased from about 47% to 58%. Similar increases very visible in Sweden and the United States. This increase was largely fueled by better female education and women’s migration into better paid jobs in the white-collar sector.
The postwar period brought about slower growth in the gender earnings ratio, but a growing participation rate due to the reentry of married women into the labor market. In this period, the earnings ratio between the countries started to diverge. While Sweden and Germany increased their earnings ratios between the late 1950s and 1980, the United States experienced stagnation from 1950 to 1980 and a rapid catch-up in the 1980s.
In the United States, the strong reentry of married women with low work experience depressed the female earnings potential (Goldin, 1990), while Germany’s postwar recession delayed married women’s reentry into the labor market and slow increases in the gender earnings ratio were observable. Sweden took the lead in terms of gender equality in the 1970s due to a set of policies propelling married women’s labor supply, absent in Germany and the United States. In Germany and Sweden, the upward trend of the gender pay ratio started in the early 1960s and stagnated after 1980.
Overall, the German path towards gender earnings equality in the last 150 years was characterized by a delayed emergence of a modern labor market offering higher-paid jobs in blue- and white-collar work for women and a delayed educational convergence between women and men compared to the United States. In comparison to Sweden, the absence of effective policy action to support women’s labor supply stands out in Germany.
In the quest for gender pay equality, understanding the long-run historical context is crucial. As Germany continues its pursuit of gender equality, lessons from its historical path can inform contemporary policies and actions to narrow the persisting earnings gap.