The impact of the child penalty on fertility

And the country where motherhood means quitting

The employment gap between women with and without children is called the ‘child penalty’. A child penalty of 20% tells us that a mother’s employment falls 20% behind a non-mother’s employment after having children. A child penalty of 0% tells us that having children has no effect on a woman’s chance of being employed, or that men and women experience equal changes in employment upon becoming parents.

The extent of the child penalty varies hugely among high-income countries. In highly progressive Norway it is only 3% and in Sweden 9%. In the US and France it is 25%. In South Korea it is 49%.

As shown in the chart below, there is a negative correlation between Total Fertility Rate in high-income countries (defined by the World Bank as countries with a Gross National Income of $13,846 or more) and the child penalty.

Correlational data of this kind should not be used to draw definitive conclusions (the correlation is only -0.43 and the R² is 0.1905). But it does indicate that as the career penalties of having children increase, women in high-income countries may become less likely to have children. Consider the case of South Korean women.

South Korea: where motherhood means quitting

South Korean women are extremely highly educated, perhaps the best educated female workforce in the world. 76% of South Korean women aged 25-34 have a tertiary qualification (the average for women of this age group across the OECD is 52%).  In spite of that, South Korea has the largest gender pay gap in the OECD and as of 2023, a female labor market participation rate that is 17.5 percentage points lower than the male: 73.3% versus 55.8%.

Photo by Daniel Bernard on Unsplash

This gap is the result of the impact of motherhood on South Korean women’s careers: there is almost no employment gap between men and unmarried women with no children. South Korea’s maternal employment rate is only 56.2%, significantly below the OECD average of 71.4%.

The high level of conflict between career and parenthood that South Korean women face is driven by characteristics of its culture and labour market. This includes: the expectation that women give up work after having a child; extreme working hours; and workplace discrimination against married and pregnant women. Over 50% of married South Korean women quit their job around the birth of their first child.

The cash grants that the South Korean government is now handing out to couples in hopes of improving the country’s ultra-low fertility rate lose their shine in light of the knowledge that a South Korean woman may never again be able to earn what she did before becoming a mother, and that she is not unlikely to lose her job altogether.

Conclusion

Boom has previously highlighted that in European countries, traditional family values are negatively correlated with birth rates and child penalties may be one reason why. Severe child penalties put the choice to work and the choice to have children at odds. Where there is a high opportunity cost of having children – whether in lost wages or high childcare and housing costs – many women will delay having children and some will never do so.

Helping everyone to have the children that they want to have, when they want to have them, must mean making work and parenthood as compatible as we can.

Phoebe