Inside the Black Box of Child Penalties

Abstract

As developed countries have been unable to completely close the gender wage and participation gap, recent literature has revisited the old findings regarding the existence of child penalties in the labor market. Developing countries, however, present different challenges to the ability of women to work for pay. In this paper, we produce the first formal estimation of the child penalties in the Mexican labor market, and the second in a Latin American context. Using an event study approach and an instrumental variable strategy as a robustness check, we estimate the short run impact of children on labor force participation, wages, shifts from hours at work to hours in unpaid labor at home and on transitions between the informal and formal sector. We find significant gaps between men and women in the short run impacts of children on both paid and unpaid work. Results show that the arrival of a child affects members of the extended family unevenly, reinforcing gender roles. We also find that childbirth has a greater effect on lower-income women's wages, and some heterogeneity by income deciles in the magnitude and trends of the effect of children on hours worked, paid and unpaid.