Is There a Motherhood Penalty in Taiwan? the Effect of Childcare on the Wages of Women

Does motherhood affect the wages of an employed woman? Because women generally take the major responsibility of childcare, researchers have noted the effect of childcare on the wages of women. At least three theories have been developed in the United States of America and Europe to explain the relationships between motherhood and lower wages. These theories include mainly human capital theory, neoclassical theory of compensating differentials, and statistical discrimination. First, scholars employing human capital theory have assumed that many women spend time at home caring for children, interrupting their job experience. This interruption is likely to reduce the accumulation of human capital such as work experience, seniority, and formal skills. Therefore, the loss of the human capital may have an influence on later wages. Second, the neoclassical theory of compensating differentials suggests that mothers may trade off higher wages for “mother-friendly” jobs that are easier to accommodate their responsibility of childcare and employment. Finally, the main argument of statistical discrimination is that employers may discriminate against women because of their motherhood status. Compared to the rich evidence of childcare wage penalty in the United States, the relationships between motherhood and the wages of women have not been well investigated in Taiwan. Therefore, this paper aims to examine the wage penalty for motherhood by using data from Panel Study of Family Dynamics with fixed-effects models. The research analyzes whether the effects vary by different marital statuses.