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We use a unique data set of all individuals who graduated from universities in Israel during the period 1995–2008 in order to investigate the widening of the gender wage gap during the years following graduation. It is found that the main explanation is having children, rather than skills or academic background. The results show that each additional child reduces a woman’s wage by 6.6%, and increases a man’s wage by 3.4%. Furthermore, we examine three channels that may explain the motherhood penalty: periods of non-employment, a shift to the public sector and lower-paying firms and the timing of births. Having children increases a woman’s period of non-employment while decreasing a man’s, and each month of non-employment due to maternity leave reduces a woman’s wage by 1.0%, while non-employment reduces a man’s wage by only 0.6%. Mothers tend to shift from the private to the public sector and from higher-paying to lower-paying firms, which offer a more flexible and more convenient work environment, at the cost of a lower salary. Finally, a delay in having children increases a woman’s wage while having little, if any, effect on a man’s wage. Furthermore, controlling for this variable reduces the estimated motherhood penalty.

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Economic outcomes are compared for university graduates in Israel belonging to four different ethnic groups. A unique dataset is used that includes all individuals who graduated with a first degree from universities and colleges in Israel between the years 1995 and 2008 and which tracks them for up to 10 years from the year they graduated. The main finding is that education and experience appear to have a strong effect on earnings in the long run and that an ethnic group can improve its position relative to specific groups while it has no effects relative to other groups.