The relaxation of birth control policies adversely affects women's income: Evidence from China's universal two-child policy

Abstract

We examine the impact of the relaxation of birth control policies on women's income. By leveraging variations in birth control polices in China following the implementation of the Universal Two-Child Policy in 2016, we find that the relaxation of birth control significantly reduces women's income and further exacerbates the intra-household income gap. Further investigation into potential mechanisms reveals that the negative impact of the UTC policy on women's income may be primarily due to the motherhood penalties associated with having a second child, as well as labor market discrimination stemming from perceived fertility intentions and increased familial responsibilities. Our study provides crucial insights for policymaking concerning fertility growth and the refinement of fertility support measures.