Explaining the gender pay gap at the NACE-classified economic sector level: the fertility–welfare nexus across the EU

Despite growing scholarly attention to the gender pay gap (GPG), limited research has examined how fertility patterns interact with welfare policies to shape gendered wage inequalities across economic sectors. This study analyses the relationship between fertility rates (FR), social protection benefits (SPB), and the GPG across 14 NACE-classified sectors in 27 EU member states between 2008 and 2023. Using fixed-effects panel regression models, the study examines sector-specific effects of fertility and its interaction with welfare spending on unadjusted gender pay gaps. The results identify four main patterns. First, higher fertility rates are associated with wider gender pay gaps in most sectors, highlighting the persistent economic penalty linked to motherhood. Second, in several sectors, the interaction between fertility and social protection spending weakens or neutralises this effect, indicating a buffering role of welfare policies. Third, in structurally rigid sectors such as construction, retail, and finance, welfare spending mitigates but does not eliminate fertility-related pay gaps. Fourth, in feminised sectors such as education, social protection spending may reinforce gendered wage stratification despite supporting labour market participation. Overall, the findings demonstrate that the impact of welfare policies on gender pay inequality is highly sector-dependent, underscoring the need for targeted and industry-specific approaches to gender equality.