Do The Number Of Children Reduce Female Income?

In order to deal with aging populations,the disappearance of the demographic dividend and other issues,China's family planning policy adjusted to the universal two-children policy in recent years.But in the short term,the number of the second-born-children doesn't achieve the desired expectations.Many qualified families unwilling to have a second child are mostly worried about the negative impact of fertility on women's career,which will result in greater economic pressure.Usually fertility has negative impact on female's income and mother with more children earn less money.This phenomenon is called motherhood wage penalty in labor economics.The penalty is common in developed countries.China's family planning policy strictly limits fertility,which may weaken the penalty.What's more,the One-Child Policy sets different fertility quota between urban and rural areas,and in different provinces of rural areas.This heterogeneity is likely to have an impact on the motherhood wage penalty.Based on the heterogeneity of family planning policy,this paper used CFPS 2012 data to identify the motherhood wage penalty by groups and adopted the son preference as an instrumental variable to solve the problem of endogeneity of the model.Through the study we found that,the urban-rural grouped regression suggests that motherhood wage penalty exists in both urban and rural areas.The rural-fertility-quota grouped regression suggests that motherhood wage penalty is not significant where the fertility quota equals 1 and the penalty is significant where the fertility quota equals 1.5 or 2.The penalty is more serious in rural areas where the fertility quota equals 2.In addition,this paper also examined two potential approaches for the penalty——the human capital and difference of compensation,we found that the number of children significantly reduces the probability for the urban women to participate in on-the-job training,but has no significant effect on the working hours of both the urban women and the rural women.The government can reduce motherhood wage penalty by means of giving financial subsidies to the new second-child family,improving the employment security system of women,and strengthening the allocation of baby care centers.