In South Korea, more women are postponing or forgoing childbirth due to concerns about career interruption. Their conscious decision to refrain from motherhood is estimated to be responsible for about 40% of the decrease in the fertility rate. In the face of the world’s lowest fertility rate, Korea needs to overhaul its policies to better support work-life balance, enabling parents to maintain their careers while raising children.

Ⅰ. The Evolution of Economic Perspectives on Fertility Rates

South Korea currently has one of the world’s lowest fertility rates. Its total fertility rate has been on a steady downward trend, decreasing by approximately 0.07 children per woman each year since 2015, when it stood at 1.24, reaching a critical low of 0.72 in 2023. In contrast, the OECD average total fertility rate has only slightly decreased by about 0.017 annually between 2015 and 2021, from 1.68 to 1.58. However, even among OECD nations that fare better than Korea, particularly those in Northern Europe, known as benchmarks for family-friendly policies, the recent decline in fertility rates has emerged as a serious social issue.

Worldwide, except for the post-war baby boomers, fertility rates have steadily declined throughout the 20th century as income levels increased. The global total fertility rate sharply decreased from 4~5 children per woman in the 19th century to 1.4~2.1 by the late 20th century (Doepke et al., 2023). Panel (a) of Figure 1 shows a negative correlation between national per capita income and fertility rates.

Economic theory advanced by Becker and Lewis (1973) and others explains the negative correlation between fertility rates and income levels through the quantity-quality trade-off theory. As the number of children increases, parents must dedicate more time to childcare. Also, as income rises, the opportunity cost of parenting time increases, prompting parents to reduce the number of children and redirect their enhanced income towards education to improve the quality of their children’s lives. This theory operates under the implicit assumption or social constraint that, while education—a means to enhance children’s well-being—can be purchased in the market, parenting time—which scales with the number of children—is an irreplaceable good that parents must personally provide.

However, since the turn of the millennium, the correlation between income and fertility rates has shifted from negative to positive especially among high-income countries (Panel (b) of Figure 1). Similarly, a positive correlation between women’s labor force participation rates and fertility rates, marking a significant change from past trends, is now observable (Panel (b) of Figure 2) (Doepke et al., 2023).

One factor driving this recent reversal of established trends regarding fertility rates is the changing socioeconomic environment. The expansion of quality public education has lessened the need for parents to bear the entire cost of their children’s private education. Moreover, with the availability of quality public and private childcare services that effectively substitute for parental care, the traditional trade-off theory, which previously explained the negative correlation between income and fertility rates, now holds less explanatory power.

Doepke and Kindermann (2019) argue that in understanding the changes in fertility-related correlations between 1980 and 2000, fertility decisions should be viewed as a negotiation between men and women. They emphasize that with improvements in women’s rights and the narrowing of gender gaps, the decision to become parents is no longer solely made by the head of the household. Instead, men (fathers) and women (mothers) jointly decide whether to have children. In modern society, childbirth occurs only with the consent from both parties, and if one refuses, it does not happen. Therefore, as quality childcare services are provided and environments are created where both equally share childcare and housework, the likelihood that women with career aspirations will refuse to have children decreases, potentially leading to higher fertility rates. Their analysis implies that in societies where women do not suffer economic disadvantages from childbirth, women’s labor force participation rates, income, and fertility rates can all increase.

 

Since the 2000s, a positive correlation between women’s labor force participation rates, income, and fertility rates has been commonly observed in high-income countries, which appears to be closely associated with the extent to which women (mothers) can balance work and family life.

Ⅱ. Women’s Probability of Career Interruption by Parenthood Status

As stated earlier, since the 2000s, there has been a noticeable trend among OECD high-income nations showing higher fertility rates as income and female labor force participation rates increase. However, there is an outlier. Despite steady increases in these two metrics since then, why has Korea’s fertility rate experienced a steep decline starting in the 2010s?

Drawing on the viewpoint of Doepke and Kindermann (2019), one possible reason for Korea’s declining fertility rate is the persistent job market conditions unfavorable for work-family balance, leading more women to postpone or forego childbirth out of fear of career interruptions. This tendency is more pronounced in socioeconomic settings where  the burden of childbirth and childcare is disproportionately borne by women. Figure 3 shows that Korea (KOR) ranks just after Japan (JPN) and Turkey (TUR) in terms of low male participation in housework, and also has the lowest fertility rates.

Despite the broader trend toward closing gender disparities, substantial disadvantages related to childbirth and childcare persist for women in Korea. Dynan et al. (2022) reveal that Korea’s gender pay gap, chiefly driven by married women with children, remains among the highest within OECD countries, even given the high educational attainment of women. Additionally, Kim and Hahn (2022) found that mothers in Korea face a long-term income decrease of about 66% as their labor force participation drops after childbirth, unlike fathers barely affected. This disparity likely stems from the career disruptions commonly experienced by women due to childbirth, a challenge that men generally do not encounter.

Assume that young women face a higher chance of career interruptions after childbirth compared to men and that the gap in the likelihood of career breaks between women with and without children is increasing. Under these conditions, it becomes economically sensible for young women to delay or give up motherhood. As more young women choose to remain childless, the overall fertility rate is bound to fall. Do young women in Korea actually experience different probabilities of career interruption depending on whether they have children?

Figure 4 presents three probabilities for female career interruption, including the average percentage for women in their 30s and the conditional percentages for women with and without children. Applying Bayes’ theorem, these figures are synthesized from two datasets by Statistics Korea: “Women experiencing career interruptions by age and reason” from the Local Area Labor Force Survey and “Projected households by household head age, type, and size” from the Household Projections.

The average probability of career interruption for women in their 30s (Pr(Career Interruption), gray), i.e., the likelihood of experiencing work hiatus for any reason, has been steadily decreasing since 2014, falling to 17% by 2023. Given that career interruptions are rare for men in Korea, this decline indicates that the overall gender gap is closing in the job market. In fact, the conditional probability for childless women (Pr(Career Interruption | without Children), orange) has seen a dramatic reduction, plummeting from 33% in 2014 to just 9% in 2023.

However, examining mothers specifically, the probability of career interruption (Pr(Career Interruption | with Children), blue) has decreased by only 4%p from 2014 to 2023.

As a result, the relative difference in the probability due to family planning (Pr(Career Interruption | with Children)－Pr(Career Interruption | without Children) has substantially expanded over the past decade (2014~23). Specifically, the extent of the growth in the likelihood of women experiencing career interruptions after childbirth has increased compared to previous years.

Put differently, as of 2023, if economically active, childless women in their 30s in Korea choose to remain childless, their probability of career interruption could decrease by at least 14%p.5) Considering the loss of human capital due to career interruptions and the potential wage increases from uninterrupted careers, this minimum reduction is enough to materially impact individual lifetime earnings. Additionally, when factoring in the costs associated with raising children, the economic benefits for these women in opting out of parenthood could be considerable.

Figure 5 displays the conditional career interruption probabilities for women with and without children, categorized by age group. Since 2014, the probability of career interruption for women with children (a) has shown diverging trends: a slight decrease for those in their 30s (orange) and a relatively substantial increase for those in their 40s (grey). This divergence has led to a modest overall increase in the career interruption probability for mothers in their 30s and 40s.

Meanwhile, the probability of career interruption for childless women has seen substantial declines in both their 30s (orange) and 40s (grey), with only slight variations. Over the past decade, there has been a marked reduction in the conditional probability of career interruptions for childless women, regardless of age. By choosing to remain childless, the likelihood of experiencing career breaks for women in these age groups in Korea can be as low as 10% as of 2023.
 

Then, despite the steady decline in the career interruption probability for childless women, why has this metric for mothers remained relatively unchanged? This could be attributed to the direction Korean society has taken in addressing the gender gap. Instead of aiming for work-family balance, the focus has been on enabling childless womento compete with men in the labor market, without adequate attention to parenting responsibilities. In other words, while outdated labor market norms that overlook work and family harmony continue to prevail, childless women have made some progress in closing gender gaps by competing on equal terms with men. However, mothers are still facing considerable employment disparities due to the competitive labor market dynamics and the unequal burden of childcare.

Per Figure 6, since 2015, a downward trend in fertility rate is evident, alongside the growing gap in interruption probabilities between women with and without children. This finding suggests that the interruption gap based on the parenthood status is a primary driver behind the fertility rate decline. Considering other multiple factors also at play, the next section will quantify to what extent career interruptions for women explain the decrease in fertility rate.

Ⅲ. The Impact of Women’s Child Penalty on Fertility Rates

To quantitatively measure the impact of women’s career interruptions on the fertility rate, this study utilizes city/county-level microdata by Statistics Koera’s Local Area Labor Force Survey. Due to data accessibility limitations, child penalty, or the after-childbirth employment disadvantages women face relative to men, is employed as a proxy variable for the gap in career interruption probabilities between women with and without children.

Specifically, to identify the anticipated shocks of the child penalty on women, this study employs the methodology of Fukui et al. (2023) to analyze changes in employment rates by gender and age, as well as the total fertility rate, at the city/county levels since 2013. As shown in the earlier analysis (Section II), the majority of the increase in the career interruption probability gap between women with and without children since 2014 is attributable to the reduced conditional probability for childless women. Building on this observation, this study further investigates how the gender employment gap among young women, who are predominantly childless, influences the decline in the total fertility rate.

Table 1 presents the estimated effects of the narrowing gender employment gap (or the increasing child penalty) among young women on the declining total fertility rate. This reduction in the gender employment gap is estimated to have lowered the total fertility rate to a statistically significant level. When including women aged 30~34 with the highest childbirth rates, in the analysis of young women, the reduction in the gender employment gap accounts for about 40% of the decrease in the total fertility rate.

The narrowing in the gender employment gap among young adults can interpreted as improved conditions for women, marked by increased status and reduced discrimination. Therefore, it can be speculated that this change will not adversely affect the fertility rate. However, despite the decreased probability of career interruption for childless women, the corresponding likelihood for mothers is either stalling or increasing. These divergent trends make the option of forgoing motherhood increasingly appealing, potentially influencing their reproductive decisions. As a result, the decrease in gender disparity in employment among childless young women has paradoxically led to a widening gap in career interruption probabilities between women with and without children, prompting more young women to delay or avoid childbirth.

Figure 7 graphically presents the data from Table 1, illustrating a scatter plot between the child penalty and the total fertility rate. A strongly negative correlation between these two variables indicates that as the child penalty increases, women are more likely to postpone or forgo childbirth, thereby leading to a decrease in the total fertility rate. Observations since 2016 show a sharp rise in the child penalty, accompanied by a dramatic fall in the total fertility rate.

On the other hand, observations from 2006 to 2012, except for 2006, show that the total fertility rate marginally increased while the child penalty decreased, unlike the fertility decline observed over the past decade. What socioeconomic factors influenced the increase in the total fertility rate during 2006~12? Over this period, a marked growth in the number of early childhood education and care institutions alleviated the childcare burden on parents of young children. Additionally, the phased implementation of a five-day workweek system enhanced work-family balance. Furthermore, the economic conditions for the young generation and newlyweds improved, supported by real estate prices and economic growth rates that increased at a similar pace, posting relatively high growth rates in total factor productivity and overall economic development.

Ⅳ. Conclusion and Policy Directions

Childbirth is a dynamic decision-making process that spans a person’s entire life, shaped by a multitude of complex factors. This study, although limited in scale, initially investigates the widening gap in career interruption probabilities between women with and without children since 2014. It then empirically analyzes how an increasing relative employment disadvantage—or child penalty—for women with children might have contributed to the declining total fertility rate in South Korea from 2013 to 2019.

The analysis outcomes imply that lowering the probability of career interruption for women with children is necessary to improve the fertility rate. To that end, recommended policies include telecommuting, working hour reduction, and increased subsidies to alleviate time constraints that parents of young children face. Additionally, it is advisable to lessen the asymmetric childcare burden on women by promoting greater involvement by men (fathers) in the care and education of infants and toddlers. These measures can decrease career interruptions for women and, consequently, elevate the fertility rate as the burden of childbirth and childcare are alleviated.

Particularly noteworthy is the persistent pattern of career interruption among women with children in their 30s and 40s since 2014, despite the availability of parental leave and temporary flexible work hours for parents in Korea’s labor market. Childbirth, childcare, and child education are core responsibilities that parents undertake until their children reach adulthood, spanning several years or decades. The ongoing discontinuity in the careers of working mothers, which has seen little to no significant improvement even recently, underscores the limitations of current short-term fertility policies, such as maternity leave lasting a few months, parental leave for one to three years, or reduced working hours available only for a couple of years. Therefore, it is prudent to establish long-term institutional support mechanisms, such as telecommuting and flexible work hours, within a decadelong policy framework to ease the time constraints faced by parents balancing work and childcare responsibilities.