This panel discussion, part of the INSIGHTS Summit on June 18, 2025, brought together economic experts to dissect the persistent gender pay gap. Moderated by Prof. Peter Haan, the conversation featured Prof. Nicola Fuchs-Schündeln, a macroeconomics expert and President of the WZB Berlin Social Science Center, and Christian Berg, CEO of the AllBright Foundation, which champions gender diversity in leadership. The panel moved beyond a simple acknowledgment of the 16% pay gap in Germany to explore its underlying causes, consequences, and potential solutions.
The Economic Cost of the Gender Pay Gap
The panel began by defining the core problem: what is the true cost of gender inequality? Prof. Fuchs-Schündeln argued that the primary loss isn't just about a lower GDP (Gross Domestic Product) from women working fewer hours. The more significant issue is the loss of productivity—the untapped talent of women who are not reaching leadership roles in business, science, or politics. She cited a study published in the journal Econometrica which estimated that the greater involvement of women in the U.S. workforce over the last 60 years was responsible for one-third of the country's GDP growth. This highlights how an economy thrives when it enables everyone to contribute their full potential.
Christian Berg reinforced this point from a corporate perspective, stating that companies miss out on innovation and diverse viewpoints when they fail to promote women. He described a "leaky pipeline" where women with strong educational backgrounds are hired but are lost during the promotion process, often due to a male-dominated corporate culture that favors male leadership styles and perpetuates groupthink.
The Role of Social Norms and Institutions
The discussion then turned to the root causes of the pay gap, identifying two major hurdles: motherhood and social norms. Prof. Fuchs-Schündeln explained that a significant portion of the pay gap emerges after women become mothers. She distinguished between personal preferences and social norms, defining a norm as a social expectation that is costly to defy. For example, while it is the norm for men to be the primary full-time earner, it is often still the norm for women to be the primary caregiver.
Breaking these norms can have real monetary and psychological costs. Prof. Fuchs-Schündeln referenced a study using Swedish data that found that professional success for women, but not for men, increases the likelihood of divorce. This suggests that defying established gender roles can strain a relationship, demonstrating the powerful and often subtle influence of social norms.
Policy and Corporate Solutions: Lessons from Sweden
Christian Berg provided a clear case study of how bold policy can change norms by comparing Germany and Sweden. He explained that in the 1970s, Sweden's government introduced individual taxation for married couples, replacing a system that discouraged women from working. This, along with a strong emphasis on parental leave for fathers, helped to fundamentally shift societal expectations about work and family roles.
Prof. Fuchs-Schündeln argued that a bold, decisive policy—rather than a series of small, incremental changes—is needed to act as a catalyst for societal shifts. She cited Germany's "Elterngeld" (parental allowance) as a key example. The policy, which provides a benefit for up to 12 months, changed perceptions and normalized the idea of returning to work after a child’s first year. This kind of bold action, she noted, is particularly relevant now, as the current labor shortage provides a crucial "window of opportunity" for policymakers to enact similar changes.
Both speakers agreed that companies have a crucial role to play. Christian Berg noted that companies with modern, forward-thinking CEOs are more likely to promote women and adopt flexible work models, such as offering full parental leave to both parents. He argued that the economic necessity to secure talent will ultimately force more German companies to challenge outdated practices and promote women to leadership roles.
