From Employment Exit to Occupational Reallocation: Child Penalties in Vietnam

This study provides new evidence on the magnitude, heterogeneity and mechanisms of the child penalties in Vietnam. Using Labour Force Survey data (2010–2020) and a pseudo‐event study design, we focus on working‐age individuals who experienced their first childbirth between ages 20 and 45. Guided by a conceptual framework, we examine the extent to which child penalties are associated with labour supply responses and job reallocation, as opposed to within‐job adjustments, and how these patterns are moderated by individual, household and institutional factors. The results show that mothers' earnings decline by approximately 35 per cent at first childbirth, while fathers experience a small, statistically insignificant increase of approximately three per cent. This gap narrows over time, leaving an 18.3 per cent relative decline in mothers' earnings after 10 years. Initial losses reflect immediate employment exits, whereas long‐run patterns are consistent with reallocation towards lower‐paying and less formal jobs, with little change in hours worked. Penalties are smaller among mothers with only one child and those with greater family and institutional support. Furthermore, education plays a central role, shaping both labour supply and occupational mobility. These findings highlight the importance of policies that support continuous employment and mitigate occupational reallocation to alleviate child penalties in Vietnam.