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Parental Earnings Trajectories around Childbirth in Japan: Evidence from local tax records

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  • Taiyo FUKAI
  • Ayako KONDO

Abstract

This study examines the impact of childbirth on parental earnings in Japan, using newly available local tax records from multiple municipalities. By applying an event study specification, we estimate the “child penalty†—the percentage reduction in women’s income relative to men’s after childbirth. Our results reveal that women’s income declines by 60–80% immediately after childbirth and remaining 50% below pre-childbirth levels even four years postpartum, while men experience modest income growth. Moreover, the study also identifies significant heterogeneity in income trajectories, particularly among higher-earning women, some of whom recover their earnings close to their pre-birth levels, whereas others earnings remain significantly below pre-birth levels. Additionally, women with pre-birth earnings were lower than the median tend to exit the workforce or adjust their income below the threshold for dependent spouses.

Suggested Citation

  • Taiyo FUKAI & Ayako KONDO, 2025. "Parental Earnings Trajectories around Childbirth in Japan: Evidence from local tax records," Discussion papers 25012, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:25012
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    References listed on IDEAS

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    1. Adams-Prassl, Abi & Jensen, Mathias Fjællegaard & Petrongolo, Barbara, 2024. "Birth Timing and Spacing: Implications for Parental Leave Dynamics and Child Penalties," IZA Discussion Papers 17438, Institute of Labor Economics (IZA).
    2. Henrik Kleven & Camille Landais & Jakob Egholt Søgaard, 2019. "Children and Gender Inequality: Evidence from Denmark," American Economic Journal: Applied Economics, American Economic Association, vol. 11(4), pages 181-209, October.
    3. Mathias Jensen & Abigail Adams & Barbara Petrongolo, 2024. "Birth Timing and Spacing: Implications for Parental Leave Dynamics and Child Penalties," Economics Series Working Papers 1048, University of Oxford, Department of Economics.
    4. Patricia Cortés & Jessica Pan, 2023. "Children and the Remaining Gender Gaps in the Labor Market," Journal of Economic Literature, American Economic Association, vol. 61(4), pages 1359-1409, December.
    5. Rebecca Glauber, 2018. "Trends in the Motherhood Wage Penalty and Fatherhood Wage Premium for Low, Middle, and High Earners," Demography, Springer;Population Association of America (PAA), vol. 55(5), pages 1663-1680, October.
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