Using the census data from 2000-2015 and a pseudo-event study design, we estimate the motherhood penalty in China and explore its association with declining fertility. We find that one-third of working women leave their jobs in the year when they give birth, and the penalty persists for over eight years. The motherhood penalty increases significantly across almost all provinces during this period, and provinces with larger increases in the penalty experience greater declines in fertility rates. Using a mover-based design, we find that the rising motherhood penalty has caused a significant decline in the total fertility rate.

We investigate how exposure to the One-Child Policy (OCP) during early adulthood affects marriage and fertility in China. Exploring fertility penalties across provinces over time and the different implementations by ethnicity, we show that the OCP significantly increases the unmarried rate among the Han ethnicity but not among the minorities. The OCP increases Han-minority marriages in regions where Han-minority couples are allowed for an additional child, but the impact is smaller in other regions. Finally, the deadweight loss caused by lower fertility accounts for 10 percent of annual household incomes, and policy-induced fewer marriages contribute to 30 percent of the fertility decline.