Economic Transition and the Motherhood Wage Penalty in Urban China: Investigation using Panel Data

Abstract

China’s economic transition has fundamentally changed the mechanisms for allocating and compensating labor. This paper investigates how the economic transition has affected the wage gap between mothers and childless women in urban China using panel data for the period 1990-2005. The results show that overall, mothers earned considerably less than childless women; additionally, the wage penalties for motherhood went up substantially from the gradualist reform period (1990-1996) to the radical reform period (1999-2005). The results also show that that although motherhood does not appear to have a significant wage effect for the state sector, it imposes substantial wage losses for mothers in the non-state sector. These findings suggest that the economic transition has shifted part of the cost of child-bearing and -rearing from the state and employers back to women in the form of lower earnings for working mothers.