The Impact of Fertility Relaxation on Gender Wage Gap

Abstract

In this paper, we study the immediate impact of fertility relaxation on the gender wage gap. We explore a 2013 policy shock that relaxed the One-Child Policy in China. Using an employer-employee matched administrative data, we show that after the policy shock the salary of female new hires is reduced by 1.8% relative to the salary of male new hires, equivalent to a 34% increase in the gender wage gap in the data. The effect is related to concerns about the increasing fertility of females and is primarily driven by the decrease in labor demand instead of labor supply change.

Keywords: One-Child Policy; Gender Wage Gap; Labor Market

JEL Classification: J13; J18; J20