The impact of the first childbirth on gender inequality in labor market outcomes in Vietnam

Abstract

This study explores a key paradox in the Vietnamese labor market. Despite having one of the world's highest female labor force participation rates, Vietnam experiences a severe “child penalty,” which is significantly greater than that observed in developed countries. Utilizing pooled repeated cross-sectional data from the Vietnam Household Living Standard Surveys (VHLSS) between 2008 and 2022, and employing an event study model, this research examines the changes in earnings, working hours, and hourly wages for women compared to men following the birth of their first child. The empirical findings reveal a substantial and persistent child penalty. In the long run, women experience an earnings decline of approximately 68% relative to similarly qualified men. Crucially, the analysis decomposes this penalty to reveal that it does not stem from women exiting the labor market (the participation margin). Instead, it arises from a "dual penalty": a sharp reduction in working hours combined with a decline in hourly wage rates. Heterogeneity analysis further indicates that this penalty is most pronounced in urban centers and industrialized hubs like the Southeast region. This study provides quasi-causal evidence using a repeated cross-sectional event study design. It highlights how gender inequality is reinforced after childbirth in Vietnam, while acknowledging key limitations. The findings point to policy reforms such as expanding childcare services, introducing non-transferable paternal leave (“daddy quotas”), and promoting flexible work arrangements.