Fertility Policy and Gender Discrimination in the Workplace:Evidence from the Two-Child Policy Reform in China

Since 2013, China’s Two-Child Policy has significantly r eformed t he O ne-Child Policy, permitting the birth of a second child. This paper explores how this policy revision affects female labor participation in China, arguing that the policy negatively impacts women’s workforce involvement resulting from statistical discrimination. We employ the China Family Panel Studies data and a difference-in-difference mo del to in vestigate di fferences bet ween wom en wit h one child and women with two children in terms of employment status, job stability, and promotion. The findings i ndicate t hat t he p robability o f o btaining e mployment i n a w age-paying position is about 8% lower for women with one child compared to women with two children. Additionally, one-child women are around 11% more likely to experience unemployment, suggesting the existence of demand-side discrimination. Our results are robust under an inverse propensity weighting approach that balances the characteristics between the treatment and control group, and Heckman’s two-step method that accounts for a selection bias. A sensitivity check considering the unobserved characteristics further validates our analysis.