Women’s Employment Transitions and Fertility

This paper explores the dynamics of female employment decisions around childbearing using longitudinal data from the 2002 Chilean Social Protection Survey (Encuesta de Protección Social, EPS). The study evaluates how the birth of a child can affect the woman’s decision to work, in particular among women with strong attachment to the labor market. The results indicate that the hazard of leaving employment is high for women during the first year of their newborn child. The mother of a newborn child is twice as likely to leave employment. The effect of newborns on employment transitions is even greater among older generations and among voluntary quitters. Even one year after the birth of a child, women still face a high risk of leaving employment. A woman who is still working when her son reaches the age of one, still faces a 50% higher risk of leaving employment. Something is making these mothers reconsider whether they should remain at work, provided that they have been working during the child’s first year of age. This could be related to the existence of maternal benefits in Chile, where women have a 20-week (paid) maternity and they are allowed up to a year of paid parental leave if the child is sick. A woman might not have any incentives (or have the need) to leave work while she is using these benefits but might be tempted (or have) to do it once she has exhausted them. The introduction of individual effects and employment history variables reveal the persistence of two contrasting labor force patterns among women. As the actual labor experience increases, the probability of entering an inactivity period decreases. Additionally, the greater the number of years a woman remained inactive in the past, the greater is the probability of re-entering an inactivity period. In the voluntary transitions model, past inactivity periods have a smaller effect on the probability of leaving employment. This can be seen as a possible indication of an important penalization by the labor market, in terms of employment opportunities after prolonged periods of inactivity.