Unraveling the Gender Wage Gap: Exploring Early Career Patterns among University Graduates

A large body of literature has shown that the gender wage gap is small in the first years after graduation and increases gradually with age, largely because of family decisions, i.e., a penalty caused by childbirth. However, the gender wage gap immediately after graduation has received less attention. Using a unique dataset that links 5,000 university graduates with master's degrees or equivalent from a large German university to detailed employment records from the German social security register, we specifically analyze the gender wage gap at the first job and its dynamics during the initial years of their careers after graduation. We find that a significant gender wage gap already exists in the first job after graduation, even before most young individuals make family decisions. However, this gender wage gap decreases in the first year after entering the labor market and then increases slowly over time. We attribute this initial decrease in the gender wage gap to female university graduates experiencing greater returns from firm and occupational changes than their male counterparts. This suggests that women may use these changes to address skill mismatches, which are more common among women than men in their first job.