In this paper, we employ twin birth as an instrument to estimate the effects of fertility on female employment using 72 censuses from 37 countries in 1990–2010. Next, we document a strong linear association between gender wage gap and the estimated motherhood employment penalty both across countries and within countries. Reductions in the gender wage gap are associated with decreases in motherhood employment penalty. Our estimates suggest that a reduction of one percentage-point in the gender wage gap is associated with a decrease of 0.4 percentage-points in the estimated motherhood employment penalty. Our finding supports the notion that job prospects and gender equality in the labor market play a direct role in a mother’s labor supply response to childbirth

Chu, Yu-Wei Luke

Cuffe, Harold E

Doan, Nguyen

ResearchArchive at Victoria University of Wellington

Motherhood Employment Penalty and Gender Wage Gap Across Countries: 1990–2010

In this paper, we use twin birth as an instrument to estimate the effects of fertility on female labor force participation using 70 censuses from 36 countries in 1990–2010. We document a strong relationship between the gender wage gap and the size of the motherhood penalty. The penalty is smallest in countries with small gender wage gaps. Both cross- and within-country relationships between motherhood penalty and gender wage gap remain strong and negative even when we condition on per-capita GDP and educational attainment. Our estimates suggest that a reduction of 1-percentage-point in the gender wage gap is associated with a decrease of 0.45–0.65 percentage-points in the estimated motherhood employment penalty

Cuffe, Harold E.

Munich RePEc Personal Archive

Munich Personal RePEc ArchiveMotherhood Employment Penalty andGender Wage Gap Across Countries:1990–2010Chu, Yu-Wei Luke and Cuffe, Harold E. and Doan, NguyenVictoria University of Wellington24 April 2020Online at https://mpra.ub.uni-muenchen.de/99866/MPRA Paper No. 99866, posted 27 Apr 2020 06:13 UTC1  Motherhood Employment Penalty and Gender Wage Gap Across Countries: 1990–2010  Yu-Wei Luke Chu luke.chu@vuw.ac.nz  Harold E. Cuffe harold.cuffe@vuw.ac.nz  Nguyen Doan* nguyen.doan@vuw.ac.nz   School of Economics and Finance Victoria University of Wellington  Abstract In this paper, we use twin birth as an instrument to estimate the effects of fertility on female labor force participation using 70 censuses from 36 countries in 1990–2010. We document a strong relationship between the gender wage gap and the size of the motherhood penalty. The penalty is smallest in countries with small gender wage gaps. Both cross- and within-country relationships between motherhood penalty and gender wage gap remain strong and negative even when we condition on per-capita GDP and educational attainment. Our estimates suggest that a reduction of 1-percentage-point in the gender wage gap is associated with a decrease of 0.45–0.65 percentage-points in the estimated motherhood employment penalty.  Keywords: Child penalty, female labor supply, family size, gender wage gap, twin birth JEF Classification: J13, J16, J18, J22       * Corresponding author.                                                           2  1. Introduction The negative effects of childbirth on a mother’s employment and wages are broadly referred to as the “motherhood penalty”. The related literature documents substantial cross-country variation in the size of the motherhood penalty (Aaronson et al. 2017; Agüero and Marks 2011; Baranowska-Rataj and Matysiak 2016; Besamusca et al. 2015; Blau and Kahn 2017; Cáceres-Delpiano 2012; Goldin 2014; Kleven and Landais 2017; Kleven et al. 2019; Olivetti and Petrongolo 2008; Olivetti and Petrongolo 2016). However, very few studies aim to systematically examine the underlying determining factors of motherhood penalty across countries and time. Baranowska-Rataj and Matysiak (2016) finds that the motherhood employment penalty in European countries is greater in places with little public support for working parent such as Anglo-Saxon and southern European countries. Aaronson et al. (2017) pool censuses from 103 countries by per-capita GDP and find that the motherhood employment penalty appears to increase with GDP.   In this paper, we document the association between the motherhood penalty and the (unconditional) gender wage gap. We utilize the well-known twin birth instrument to estimate the causal effect of children on a mother’s labor force participation using harmonized international censuses from the Integrated Public Use Microdata Series, International (IPUMS-I). Unlike Baranowska-Rataj and Matysiak (2016) and Aaronson et al. (2017), we do not pool data across countries; instead, we separately estimate the motherhood penalty in each country, year-by-year. Therefore, we can investigate both cross- and within-country variation in the gender wage gap and the motherhood penalty on employment. We document that the effects of childbirth on labor force participation are more negative in countries with larger gender wage gaps. The pattern remains when we restrict attention to within-country changes in gender wage gaps and fertility effects, and when we further control for within-country changes in per-capita GDP and education level. Focusing on within-country changes, the estimated motherhood penalty decreases by 0.59–0.65 percentage-points when the gender wage gap shrinks by 1 percentage point. Our findings agree with the argument that reductions in the gender wage gap raise the opportunity cost of labor force inactivity for mothers, thereby reducing the apparent child penalty on employment.  2. Data and Model We collect data on the gender wage gap from the Organization for Economic Co-operation and Development, International Labour Organization, and United Nations Economic Commission for Europe, International Trade Union Confederation. (See Figure A1.) Gender 3  wage gap is defined as the difference between average earnings of women and men relative to earnings of women: 𝐺𝑊𝐺 = 𝑀𝑎𝑙𝑒 𝑒𝑎𝑛𝑖𝑛𝑔𝑠 − 𝐹𝑒𝑚𝑎𝑙𝑒 𝑒𝑎𝑛𝑖𝑛𝑔𝑠𝑀𝑎𝑙𝑒 𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠  𝑥 100%. To estimate the motherhood employment penalty, we use censuses for 36 countries from IPUMS-I and focus on the period from 1990 to 2012, a relatively recent period for which data on gender wage gap are available.  Following Angrist and Evans (1998), we create a sample of mothers aged 21–35 with least two children for each of the 70 country-year censuses.1  We estimate the following linear model by both ordinary least squares (OLS) and two-stage least squares (2SLS):  𝑊𝑜𝑟𝑘𝑖 = 𝛼 + 𝛽. 𝑁𝑐ℎ𝑖𝑙𝑑𝑖 + 𝑋𝑖Γ + 𝜀𝑖                                       (1)  where 𝑊𝑜𝑟𝑘𝑖 is an indicator for mother 𝑖 working; 𝑁𝑐ℎ𝑖𝑙𝑑𝑖 is an indicator denoting that mother 𝑖 has more than two biological children; 𝑋𝑖 is a vector of control variables including: mother’s age, mother’s age at first childbirth, the sex of the first child, and indicators for four education levels: less than primary, primary, secondary, and university and above. Since the fertility decision is likely endogenous, 𝑁𝑐ℎ𝑖𝑙𝑑𝑖  is instrumented by 𝑇𝑤𝑖𝑛𝑏𝑖𝑟𝑡ℎ𝑖 , an indicator denoting that mother 𝑖’s second pregnancy is a twin birth (Aaronson et al. 2017; Jacobsen, Pearce, and Rosenbloom 1999). The standard errors are made robust to heteroskedasticity.   3.  The Motherhood Employment Penalty and Gender Wage Gap Figure 1 plots the distributions of OLS and 2SLS estimates of the effects of having more than two children on mothers’ labor force participation from 70 censuses. The OLS estimates appear to be downward biased and overstate the size of motherhood penalty. Therefore, we focus on the 2SLS estimates.  In the left panel of Figure 2, we plot the 2SLS estimates (and their 95% confidence intervals) of the motherhood employment penalty (?̂?2𝑆𝐿𝑆) against the gender wage gap (𝐺𝑊𝐺 in the figures) in each country.2  The slope of the fitted regression line is -0.45 and statistically significant at the 1% level, suggesting a strong negative association between the gender wage gap and the motherhood employment penalty. On average, a 1-percentage-point reduction of the gender wage gap is associated with a 0.45-percentage-point decrease in the estimated motherhood employment penalty. Because a smaller gender wage gap implies a higher opportunity cost for domestic work and childcare, the observed cross-country association in the                                                           1 There are total 201 censuses from IPUMS-I in 1990s to 2010s.  2 Figure A2 plots the ?̂?𝑂𝐿𝑆 against GWG.   4  left panel of Figure 2 is consistent with a substitution effect on the extensive margin from the standard neoclassical labor supply model: mothers are more likely to enter the labor force when the return to market work becomes relatively high while the return to domestic work becomes relatively low.  The cross-country association between motherhood penalty and gender wage gap could be driven by country heterogeneity. For example, both the motherhood penalty and gender wage gap tend to be large in more religious countries. In the right panel of Figure 2, to control for time-invariant country heterogeneity, we plot within-country changes in the estimates for motherhood penalty (∆?̂?2𝑆𝐿𝑆) against within-country changes in gender wage gap (∆𝐺𝑊𝐺) (Countries with only one census are excluded). We find that a narrowing gender wage gap is associated with a decrease in motherhood employment penalty, and the association becomes stronger when we control for country heterogeneity. The slope of the fitted regression line is -0.65 and statistically significant at the 1% level. On average, a 1-percentage-point reduction in the gender wage gap is associated with a 0.65-percentage-point decrease in the estimated motherhood employment penalty. Aaronson et al. (2017) document a positive relationship between economic development and motherhood employment penalty. To check whether our findings are also driven by economic development, we partial out the GDP per capita from gender wage gap and motherhood employment penalty and plot the residuals. In Figure 3, the slopes of the fitted regression in the left and right panel are still statistically significant at 1% level and equal to -0.41 and -0.65, respectively. In Figures 4 and 5, we further partial out education attainment, and the relationship between motherhood penalty and gender wage gap remain unchanged. Therefore, both cross- and within-country relationships between motherhood penalty and gender wage gap remain strong and negative even when we condition on GDP per capita and educational attainment.   4. Conclusions  This paper documents the association between the effects of fertility on mothers’ labor force participation and the gender wage gap in 1990s–2010s. We find that the effects of childbearing on mothers’ labour supply is less negative in countries with smaller gender wage gaps, and declines in a country’s gender wage gap are strongly associated with reductions in the motherhood employment penalty.   References: 5  Aaronson, Daniel, Rajeev Dehejia, Andrew Jordan, Cristian Pop-Eleches, Cyrus Samii, and Karl Schulze. 2017. The effect of fertility on mothers’ labor supply over the last two centuries. National Bureau of Economic Research. Agüero, Jorge M., and Mindy S. Marks. 2011. "Motherhood and female labor supply in the developing world evidence from infertility shocks." Journal of Human Resources no. 46 (4):800-826. Angrist, Joshua D, and William N Evans. 1998. "Children and Their Parents' Labor Supply: Evidence from Exogenous Variation in Family Size." American Economic Review:450-477. Baranowska-Rataj, Anna, and Anna Matysiak. 2016. "The causal effects of the number of children on female employment-do European institutional and gender conditions matter?" Journal of Labor Research no. 37 (3):343-367. Besamusca, Janna, Kea Tijdens, Maarten Keune, and Stephanie Steinmetz. 2015. "Working Women Worldwide. Age Effects in Female Labor Force Participation in 117 Countries." World Development no. 74:123-141. doi: https://doi.org/10.1016/j.worlddev.2015.04.015. Blau, Francine D, and Lawrence M Kahn. 2017. "The gender wage gap: Extent, trends, and explanations." Journal of Economic Literature no. 55 (3):789-865. Cáceres-Delpiano, Julio. 2012. "Can we still learn something from the relationship between fertility and mother’s employment? Evidence from developing countries." Demography no. 49 (1):151-174. Goldin, Claudia. 2014. "A grand gender convergence: Its last chapter." American Economic Review no. 104 (4):1091-1119. Jacobsen, Joyce P., James Wishart Pearce, and Joshua L. Rosenbloom. 1999. "The Effects of Childbearing on Married Women's Labor Supply and Earnings: Using Twin Births as a Natural Experiment." The Journal of Human Resources no. 34 (3):449-474. doi: 10.2307/146376. Kleven, Henrik, and Camille Landais. 2017. "Gender inequality and economic development: fertility, education and norms." Economica no. 84 (334):180-209. Kleven, Henrik, Camille Landais, Johanna Posch, Andreas Steinhauer, and Josef Zweimüller. 2019. Child penalties across countries: Evidence and explanations. Paper read at AEA Papers and Proceedings. Olivetti, Claudia, and Babara Petrongolo. 2008. "Unequal Pay or Unequal Employment? A Cross‐Country Analysis of Gender Gaps." Journal of Labor Economics no. 26 (4):621-654. doi: 10.1086/589458. Olivetti, Claudia, and Barbara Petrongolo. 2016. "The evolution of gender gaps in industrialized countries." Annual review of Economics no. 8:405-434.      6  Figure 1: Distribution of the Motherhood Employment Penalty Estimates                      7  Figure 2: Relation of child penalty and gender wage gap  Notes: In the left panel, the lower and upper caps represent the 95% confidence intervals of each estimate                8  Figure 3: Child penalty after partialling out GDP per capita                  9  Figure 4: Child penalty after partialling out educational attainment                  10  Figure 5: Child penalty after partialling out educational attainment and GDP per capita                     11  Table A1: List of countries Country Year Country Year Country Year Country Year Argentina 1991 Costa Rica 2000 Mexico 2010 Switzerland 1990 Argentina 2001 Costa Rica 2011 Nicaragua 1995 Switzerland 2000 Austria 1991 Dominican 2002 Nicaragua 2005 U.S. 1990 Austria 2001 Dominican 2010 Panama 1990 U.S. 2000 Belarus 1999 Egypt 1996 Panama 2000 U.S. 2010 Belarus 2009 Egypt 2006 Paraguay 1992 Turkey 1990 Bolivia 1992 France 1999 Paraguay 2002 Turkey 2000 Bolivia 2001 France 2006 Peru 1993 U.K.  1991 Botswana 1991 France 2011 Peru 2007 Uruguay 1996 Botswana 2001 Greece 2001 Philippines 2010 Uruguay 2006 Brazil 2000 Greece 2011 Poland 2002 Uruguay 2011 Brazil 2010 Honduras 2001 Portugal 2001 Venezuela 1990 Canada 2011 Hungary 1990 Portugal 2011 Venezuela 2001 Chile 1992 Hungary 2001 Romania 1992 Vietnam 1989 Chile 2002 Hungary 2012 Romania 2002 Vietnam 1999 China 1990 Indonesia 2010 Romania 2011 Vietnam 2009 China 2000 Ireland 2011 Spain 2001   Colombia 2005 Mexico 2000 Spain 2011     Notes. We exclude 7 censuses in which persons are not organized into households,  as we cannot match mothers with their children; and censuses in which age is grouped into categories, as we cannot identify birth orders and twin births (Eg. Canada 1991 and 2001, U.K. 2001).               12  Figure A1. Frequency of gender wage gap database  Notes. We limit that the gender wage gap data must come from the same source for each country over the period. The author calculate data of Vietnam and China by the Vietnam Household Living Standard Survey (VHLSS), the China Health and Nutrition Survey (CHNS).               13  Figure A2. Relation of child penalty and gender wage gap by OLS     

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Motherhood Employment Penalty and Gender Wage Gap Across Countries: 1990–2010

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