Parenthood and gender inequality on labor market outcomes: Evidence from South Korea

Abstract This study estimates the long‐term effect of parenthood on labor market outcomes and explores the variations within this effect by gender and education. We use the event study method to track changes in a range of labor market outcomes from 3 years before to 8 years after the first birth, with a sample of 556 married women and 528 married men from the Korea Labor and Income Panel Study (KLIPS). We find that women experience an immediate drop in wages following birth, whereas men experience continuous wage growth even before birth. The decline in women's wages arises largely from their withdrawal from the labor market, while the increase in men's wages could be explained by a positive selection bias among fathers. In addition, mothers' wage trajectories do not vary significantly by education level, whereas other labor market outcomes show discernible trends. These patterns are the opposite of those observed for men. The findings indicate that severe gender inequality in the Korean labor market lowers the wages of mothers, regardless of their education, while the wages of fathers are more likely to be affected by education. Based on the findings, we make policy suggestions for improving the work‐family balance for all genders.