After the motherhood penalty: how does child care promote female entrepreneurship in urban China

Abstract Current research suggests that the motherhood penalty, resulting from the traditional gender division of labor, negatively affects women’s labor force participation and compensation. However, with the development of the economy and the diversification of occupational types, women may leverage the abundant resources available to them to start businesses, achieve a work-family balance, and ensure career sustainability. If this possibility is confirmed, it could demonstrate the promoting effect of child care on urban women’s transition from employment to entrepreneurship and reveal policy interventions that might enhance both fertility and employment rates. Based on the data from the 2022 China Family Panel Studies (CFPS), this paper confirms that the number of children under the age of 16 positively influences women’s entrepreneurial decision-making in urban China. This effect is mediated by total compensation and is weakened by education level. This study highlights how the motherhood penalty shapes entrepreneurial decisions and provides a foundation for policy support aimed at helping women of childbearing age pursue entrepreneurship. Such policies could enhance women’s fertility intention, boost their labor force participation, and promote sustainable economic and social development.