The Welfare Impact of Motherhood - with Paula Calvo, Ilse Lindenlaub and Yoko Okuyama
Description: A growing body of literature has documented large motherhood penalties in labor market outcomes. However, its welfare implications are unclear because lower earnings need not translate into lower welfare within households that share resources. We use detailed data on married couples in Japan, which measure the allocation of consumption between spouses alongside labor market outcomes, demographics, social norms, attitudes, and marital histories. Using the data, we show that the motherhood penalty extends beyond labor market outcomes: women’s share of household consumption drops after having children. We then embed a collective household model with endogenous fertility, human capital accumulation, and divorce into an equilibrium model of the marriage market. The framework allows for heterogeneity in preferences, expectations about the mental load of motherhood, childcare constraints, and gender norms. We use the model to measure the welfare effects of motherhood, decompose the mechanisms that generate the motherhood penalty, and evaluate how policy reforms, such as childcare expansions, affect mothers’ welfare.