Scared Away: Credit Demand Response to Expected Motherhood Penalty in the Labor Market

57 Pages Posted: 16 Aug 2023 Last revised: 26 Mar 2024

See all articles by Darwin Choi

Darwin Choi

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Zhenyu Gao

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Singsen Lam

The Chinese University of Hong Kong (CUHK)

Tian Li

TCL Corporate Research

Wenlan Qian

National University of Singapore - NUS Business School

Date Written: March 21, 2024

Abstract

We exploit a policy reform that exogenously deteriorates mothers’ job prospects. China switched from a one-child policy to two-child in 2016, which increased female workers’ childbearing and caring responsibilities. Using a leading peer-to-peer lending platform targeting college students in China, we find that loan applications from female college students decrease by 15.6% relative to male students after the reform. The drop suggests that female students can anticipate the poorer future job prospects; they reduce their expenditure and invest less in human capital accordingly. Applications for long-term and large-amount loans and loans for human capital investment purposes experience the largest decline. We also find that loan applications decrease after provincial governments’ staggered extension of maternity leaves and that the decrease is more prominent when the expected motherhood penalty is greater. The results are unlikely driven by credit supply channels.

Keywords: Motherhood Penalty, Two-child Policy, Gender Gap, P2P lending, Household Finance

Suggested Citation

Choi, Darwin and Gao, Zhenyu and Lam, Singsen and Li, Tian and Qian, Wenlan, Scared Away: Credit Demand Response to Expected Motherhood Penalty in the Labor Market (March 21, 2024). Available at SSRN: https://ssrn.com/abstract=4539887 or http://dx.doi.org/10.2139/ssrn.4539887

Darwin Choi

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

Zhenyu Gao

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong
(852)39431824 (Phone)

HOME PAGE: http://sites.google.com/site/gao515515/

Singsen Lam (Contact Author)

The Chinese University of Hong Kong (CUHK) ( email )

Tian Li

TCL Corporate Research

Hong Kong

Wenlan Qian

National University of Singapore - NUS Business School ( email )

15 Kent Ridge Drive
Singapore 117592, 119245
Singapore
(65) 65163015 (Phone)

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