The effect of maternity on employment and wages in Mexico

ABSTRACT

We estimate child penalties in the Mexican formal labour market at the aggregate level and for specific population subgroups. We use longitudinal administrative data for formal workers. The child penalty begins immediately with pregnancy. Six years after childbirth, the average penalty is 24% on wages and 16% on the rate of formal employment for women who are mothers. The penalties are greater for mothers who are married, poor, or young. The wage penalty increases over time.

KEYWORDS:

• Child penalty
• event study
• motherhood
• gender gap
• Mexico/Latin America

JEL CLASSIFICATION:

• J12
• J13
• J16
• J22
• O54

Acknowledgments

The content of this study does not necessarily reflect the official opinion of IMSS. Responsibility for the information, errors, omissions, and views expressed lies entirely with the authors. The dataset used in this study is confidential; the first two authors did not have access to the full dataset. We especially thank an anonymous reviewer and the editor for their insightful comments and suggestions.

Disclosure statement

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

Supplementary material

Supplemental data for this article can be accessed here.

Notes

¹ The Supplementary Materials include results using matching without replacement as well as a sample restricted to couples in which both persons are observed for the period of analysis.

² The solid line in the second y-axis is equal to $\left\{E\left[Y_{i,t}|Mother\right]-E\left[Y_{i,-4}|Mother\right]\right\}-\left\{E\left[Y_{i,t}|Father\right]-E\left[Y_{i,-4}|Father\right]\right\}$.

³ Kleven, Landais, and Søgaard (2019a) calculate elasticity as $P\equiv \frac{{\hat{\beta }}_t^m-{\hat{\beta }}_t^w}{E\left[{\tilde{Y}}_{ist}^w|t\right]}$, where m denotes men and w women. The child penalty is then the percentage by which women having children at event time t fall behind men.

⁴ This might be explained by cultural and economic factors, given the low female labour force participation rate in Mexico (47%).