Monopsony: Faith and the Child Penalty: Religious Affiliation and Gendered Earnings Losses After Childbirth

The relationship between parenthood and gendered labor market outcomes has been extensively studied, with the ‘child penalty'—defined as the effect of having children on mothers' labor earnings relative to their partners'—documented in many countries. While prior research has explored institutional and normative drivers of this gap, the role of religious affiliation remains understudied, particularly at the population level. Religious beliefs shape both fertility decisions and labor market behavior and hence are potentially an important factor shaping heterogeneity in the size of the child penalty. Using comprehensive Austrian register data, this study provides novel evidence on the intersection of religious affiliation and the child penalty. Our results indicate that religious affiliation acts as a moderator of child penalties. Women with a religious affiliation, particularly those belonging to the Catholic majority, experience substantially larger earnings losses following childbirth compared to their secular peers. A decade after the birth of the first child, the woman’s share of the couple’s joint labor income declines by around 25 percentage points among couples where both partners are Catholic, compared to 18 percentage points among religiously unaffiliated couples. These findings underscore the importance of cultural factors in shaping the economic consequences of motherhood.