Does Childcare Cost Women More? A Study of the Gender Income Gap in Pakistan

This paper examines the economic costs of caregiving for women in Pakistan, with a focus on the caregiving wage penalty and its variation across the wage distribution and between urban and rural contexts. Using nationally representative data from the Pakistan Social and Living Standards Measurement Survey 2019–2020, the analysis combines Propensity Score Matching (PSM), Ordinary Least Squares (OLS), Recentered Influence Function (RIF) regressions, and RIF–Oaxaca decompositions. PSM estimates indicate that female caregivers earn approximately 44% less than comparable non-caregivers, while OLS results confirm a penalty of around 48%. Extending the analysis to the intensive margin, each additional child is associated with a wage reduction of approximately 12%, although the effect diminishes with increasing family size. The presence of a young child (aged 0–6) results in a significant penalty, whereas the presence of older children does not affect earnings. RIF–OLS estimates reveal that penalties are not uniform: at the 10th quantile, caregivers earn 67%–73% less than noncaregivers, with the gap narrowing to about 21%–28% at the 90th quantile. The RIF– Oaxaca decomposition highlights a persistent rural disadvantage, with total rural–urban caregiving gaps ranging from 16% to 24%, driven by both weaker endowments (lower schooling and agricultural employment) and lower returns to those characteristics. These findings demonstrate that caregiving responsibilities impose a substantial and unequal wage penalty on women, with the heaviest burden falling on low-income and rural mothers.