Among many factors that cause a low birth rate in South Korea, the difficulty of working while having children for mothers can be particularly problematic to policymakers. In this paper, we investigate the impact of children on the labor market trajectories of families. Using panel data from South Korea and an event study approach, we show that the child penalty in pay exists for mothers, and the arrival of a first child creates persistent gender inequality in the labor market. We present two main sets of results.
First, we have shown that the impact of children on women's employment and earnings is persistent while, at the same time, men are unaffected. Children have a large and sharp effect on women's employment and earnings. In contrast to the results of women, men do not show a drop in employment and earnings due to childbirth. However, men increase the hours worked and decrease the family time after the first child's birth. This can be indirect evidence of inequality in the household's childcare burden.
Second, we explore the heterogeneity of the child's impact. We hypothesize that heterogeneity comes through the composition of 3 different channels: 1) different perceptions of motherhood and gender norm, 2) different expectations of caregiving burden, and 3) qualitative differences in the labor market and opportunity cost. The experience of being raised by a working mother, nor holding a college degree, does not make the mothers suffer less from the motherhood penalty. While we do not fully disentangle the impact from all the plausible channels, we suggest that unexpectedness on motherhood burden may have resulted in a dramatic pattern of motherhood penalty in the context.