Literature defines child penalty as the sustained decline in women’s earnings after childbirth, which has been widely studied. However, its consequences for the next generation remain least known. This paper examines whether maternal earnings losses transmit to children especially their educational attainment across four countries with distinct institutional settings: Denmark, Italy, Indonesia, and South Africa. We link event-study estimates of the child penalty to intergenerational regressions using administrative registers and longitudinal household surveys. Findings show differentiated institutional effects. Denmark’s long-run penalty is small at 4.5 percent and intergenerational transmission is absent. Italy’s penalty is persistent at 23 percent with a modest transmission effect. In Indonesia and South Africa, penalties exceed 30 percent with no recovery, and a one-standard-deviation increase in maternal cumulative earnings loss reduces children’s schooling by 0.04 years. Mediation analysis shows that household income loss during early childhood accounts for almost half of this transmission, while maternal employment instability contributes an additional quarter. The financial channel dominates. We conclude that where public insurance absorbs the cost of childbearing, the child penalty does not spill over to the next generation. In low-safety-net settings, however, it becomes a mechanism of intergenerational persistence. Policies that provide income support and childcare during early childhood can sever this link.
The Intergenerational Transmission of the Child Penalty, Socioeconomic Heterogeneity and Educational Outcomes:
Evidence from Denmark, Italy, Indonesia, and South Africa
- Beatrice Mbinya