Motherhood Wage Penalty in Times of Transition

Motherhood is usually associated with lower wages due to a number of reasons such as career interruptions, potentially decreased productivity/effort, and discrimination. Earlier literature provides a range of estimates from an up to 20% wage penalty in economies with more flexible labor markets to virtually zero in more family-supportive settings. We focus on a country with de jure family supportive labor laws, which de facto has developed very flexible pro-employer hiring and firing practices. We seek to understand whether this status quo has any implication for the country's concern related to lowest low fertility.Ukrainian Longitudinal Monitoring Survey provides the data to estimate the motherhood wage penalty in Ukraine during the period from 1997 to 2004. Controlling for individual unobserved heterogeneity we find that the wage penalty is approximately 6.5% per one child and 13.2% for two or more children. In addition, we find that the level of education and the timing of first birth has an impact on the motherhood wage penalty. It is smallest for females with vocational/professional education, and virtually disappears if female in this group gave first birth after 20 years old. Females with low educational level even receive wage premium of 15% if they delay first birth until after 30 years