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Parental Earnings Trajectories around Childbirth in Japan: Evidence from local tax records

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  • FUKAI Taiyo
  • KONDO Ayako

Abstract

This study examines the impact of childbirth on parental earnings in Japan, using newly available local tax records from multiple municipalities. By applying an event study specification, we estimate the “child penalty†—the percentage reduction in women’s income relative to men’s after childbirth. Our results reveal that women’s income declines by 60–80% immediately after childbirth and remaining 50% below pre-childbirth levels even four years postpartum, while men experience modest income growth. Moreover, the study also identifies significant heterogeneity in income trajectories, particularly among higher-earning women, some of whom recover their earnings close to their pre-birth levels, whereas others earnings remain significantly below pre-birth levels. Additionally, women with pre-birth earnings were lower than the median tend to exit the workforce or adjust their income below the threshold for dependent spouses.

Suggested Citation

  • FUKAI Taiyo & KONDO Ayako, 2025. "Parental Earnings Trajectories around Childbirth in Japan: Evidence from local tax records," Discussion papers 25012, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:25012
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