The Effect of Childbirth on Women’s Formal Labour Market Trajectories: Evidence from Uruguayan Administrative Data

Abstract

The motherhood penalty for developed countries is well-established in the economic literature. Childbirth intensifies the traditional gender roles that affect paid and unpaid work and contributes to the persistence of the gender labour gap. However, little is known about this phenomenon for developing contexts. This paper investigates the motherhood effects on women’s formal employment and wage trajectories in Uruguay. We document significant and robust motherhood penalties in the labour market, applying an event study method to almost 20 years of social security administrative data. One year after childbirth, formal monthly labour earnings decrease by 22 per cent. This drop fails to recover over time, and ten years after the arrival of children, women’s earnings are 40 per cent below their level just before childbirth. This penalty is mainly driven by a drop in formal employment and, to a lesser extent, a wage decline for those remaining employed. Heterogeneous analysis shows that low-wage women face higher motherhood penalties than high-wage women. Interestingly, these negative effects on wages and formal employment have reduced over time, and recent mothers face lower motherhood penalties.

Keywords:

• Gender gap
• motherhood
• formal employment
• event-study
• developing country

JEL CLASSIFICATION CODES:

• J13
• J16
• J22
• J31

Acknowledgements

The authors are grateful to Maira Colacce, Carlos Casacuberta, and all participants in the XVIII academic sessions in the Social Sciences Faculty-UdelaR, Uruguay, academic seminar in the Institute of Economics-UdelaR, Uruguay; and XI seminar of the Network on Inequality and Poverty in Latin America and the Caribbean (LACEA-NIP) for excellent technical suggestions and useful comments. We also thank the editor in charge of the paper and two anonymous referees for their substantial comments.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

Data is provided by Banco de Previsión Social confidentially, and so it is not publicly available.

Notes

1 Some other work in progress includes Aguilar-Gomez et al. (2019) and Berniell et al. (2021b).

2 Own calculations based on microdata of the 2013 National Youth Survey.

3 Own calculations based on microdata of the 2015 Reproductive Behavior Survey.

4 For a more detailed explanation of the methodology see Sun and Abraham (2021), Borusyak and Jaravel (2016), and Kleven, Landais, et al. (2019).

5 The estimation procedure is based on codes by Kleven, Landais, et al. (2019): https://www.openicpsr.org/openicpsr/project/116366/version/V1/view.

6 Unfortunately, we cannot identify the case of multiple childbirths.

7 The analysis of the effect of additional events faces serious potential bias issues. Indeed, the sample of women who use the program a second time is composed of mothers with a higher probability of remaining in a formal job after the first childbirth. However, we estimated the effect of the first child separately for women with one use of the maternity leave program, two, and three or more uses, and find a significant decline in formal employment close to our estimates for the three samples (results available under request).