[News Terms] The 'Child Penalty' Behind South Korea's Birthrate Shock

The term ‘child penalty,’ identified as a major cause of the declining birth rate in Korea, refers to the employment disadvantages women face due to childbirth in economics. While men’s employment rates do not change regardless of whether they have children, women may experience employment disadvantages due to career interruptions caused by childbirth and childcare.

[Image source=Yonhap News]

This concept has been widely used in the labor market since the 2011 report “Doing Better for Families” published by the Organisation for Economic Co-operation and Development (OECD). Through this report, which compared the effectiveness of family and employment policies across countries, the OECD advised that measures such as flexible parental leave systems, expansion of childcare facilities, flexible jobs, and strengthening gender equality policies are necessary to reduce the child penalty.

The paper “Children and Gender Inequality: Evidence from Denmark,” co-authored in 2018 by Rick Kleven, Professor of Economics at Princeton University, Camille Landais, Professor of Economics at the London School of Economics, and Jakob Egholt Søgaard, Professor at the University of Copenhagen, quantifies the economic impact of childbirth on women and analyzes how childbirth widens gender wage and employment gaps using the concept of ‘child penalty.’

Recently, research combining the child penalty issue in the labor market with the trend of population decline has been actively conducted.

According to “KDI Focus: Women’s Career Interruption Concerns and Declining Fertility Rate,” published on the 16th by Research Fellow Jo Deok-sang and Senior Researcher Han Jeong-min of the Korea Development Institute (KDI), the average probability of career interruption among women in their 30s steadily decreased from 2013 to 2019, but this was concentrated among women without children. The probability of career interruption for childless women sharply dropped from 33% in 2014 to 9% last year, whereas for women with children, it only decreased from 28% to 24% during the same period. In particular, if childless women in their 30s give up childbirth, it was analyzed that the current career interruption probability in 2023 could be reduced by at least 14 percentage points. This childbirth penalty experienced by women in their 30s was analyzed to have influenced the decline in the birth rate, with the researchers estimating that it accounts for about 40% of the overall decline in the birth rate.