The last hurdle? Unyielding motherhood effects in the context of declining gender inequality in Latin America

This paper explores the link between the effect of children on mothers’ earnings—the so-called child penalty—and the observed gender earnings gap in Latin America over the last two decades. Leveraging repeated cross-sectional data from harmonized household surveys spanning the 2000–2021 period in 14 countries, we estimate the impact of motherhood on earnings using a pseudo-event study approach around the birth of the first child (Kleven, 2022). Unlike traditional event studies that rely on panel data, we build pseudo-panels at the individual level by matching individuals with similar observable characteristics, including birth cohort, allowing us to track fathers and mothers over time, and estimate the effect of children on their earnings. These effects are then used as inputs in an Oaxaca–Blinder decomposition to quantify their contribution to the observed gender earnings gap. Our findings reveal that the motherhood effect is possibly the single most important factor contributing to the remaining income disparities between men and women in the region: it represents 41% of the gender gap among parents and 34% of the overall gender earnings gap. Importantly, its relative importance has been increasing over the years. Specifically, while the overall earnings gap between fathers and mothers decreased by more than eight percentage points over the last two decades, the motherhood-related gap remained nearly constant. As a result, the share of the motherhood-related gap within the total gender earnings gap increased from 37% to over 46%. Furthermore, a country-by-country analysis reveals that the motherhood-related gap shows little variation across countries and does not correlate with GDP per capita, suggesting the distinct rigidity of gender gaps stemming from the motherhood effect compared to other determinants of gender income inequality. We also provide a comprehensive overview of the motherhood effects on labor market outcomes beyond mere employment status and earnings, such as hours worked and labor informality. This sheds light on key mechanisms underlying labor market adjustments upon motherhood in Latin America.