An extensive literature, mostly in developed countries, documents that mothers work fewer hours, earn lower wages and thus have lower earnings than childless women. Using rich longitudinal data from Indonesia, taking into account individual-specific unobserved heterogeneity, we establish that women who remain in the labor force reduce their work hours but pay no penalty in terms of wages, whether they are in the market or self-employed sectors. These hours and earnings declines are temporary and, 5 years after the birth, labor market outcomes of mothers and childless women are not different. Since there is no compensating increase in earnings of fathers or other household members, there are also temporary declines in household income and expenditure, indicating that the impact of reduced hours of work are spread across multiple domains of well-being. These results contrast sharply with those from advanced countries and indicate that the motherhood wage penalty is not universal.
Presented in Session 17. Gender, Family, and Work