The Effect of Motherhood on Wages: are women’s wage penalties due to lack of career aspirations?

Abstract

ABSTRACT Mothers’ wages tend to be lower than those of equivalent childless women, and many researchers have reported on this ‘motherhood wage penalty’. We explore the relationship between pre-school children and their mothers’ wages to estimate the short-term effects of the ‘motherhood wage penalty’ and test the mechanisms of the ‘motherhood wage penalty’ in terms of changes in mothers’ mindsets. In addition, a novel instrumental variable was found. Based on data from the China Family Panel Studies, we find that children in China have a significant negative impact on the increase in mothers’ wages. The penalty is most severe for the low-income group. The reduction in mothers’ career enthusiasm after childbirth explains only 3.5% of the wage gap, suggesting that the wage penalty for mothers may come mainly from extrinsic factors. In addition, we find that grandparent care and the establishment of public childcare centres are effective in mitigating the ‘motherhood wage penalty’, and that delaying retirement may be detrimental to mothers’ wage increases.