May 2011| No. 9 The Earnings Penalty for Motherhood in Urban China during the Economic Transition by Jia Nan and Dong Xiao-yuan 1. I NTRODUCTION Women's reproductive activities(mainly giving birth and child rearing) are not only essential to future human de­velopment and welfare, but also important in promoting sustained economic growth as they contribute to invest­ment in human and social capital. However, in many market economies, women's reproductive contribution is not recognized. Instead, it puts them at a disadvantage in the labor market, resulting in lower status and wages (Elson 1999). Research frequently finds that women with children make far less money than women without chil­dren(Waldfogel 1998). The term in the literature for reproduction-related income loss is“the earnings penalty for motherhood”(Budig and England 2001). Many explanations are provided for this“penalty for motherhood”. First, there is the human capital hypothe­sis(Becker 1964): maternity and child rearing interrupt women's participation in the labor market, which re­duces women's human capital investment. Maternal concerns also force many women to take up jobs that enable them to strike a better balance between work and family, such as part-time jobs and self-employment. However, such informal employment usually provides lower and unstable pay. Women may also miss on-the­job training opportunities because they have to spend time with children. Compared with men or childless women, women with children have lower human capi­tal, and therefore lower income. Second, there is the work effort(family responsibilities) hypothesis (Anderson ， Binder and Krause 2002): mothers assume more family responsibilities than fathers. For the sake of their children, mothers spend less time and effort on work, which affects their work efficiency and earnings negatively. Third, there is the discrimination hypothesis (Waldfogel 1998): employers are reluctant to hire or promote women with children on the grounds that their commitment and efficiency are likely to be compromised by family responsibilities. This again restrains women's income growth. The negative impact of motherhood on women's income is a key factor in gender-based wage differences. China has experienced a transition from a planned economy to a market economy over the past 30 years. The economic transition has brought about huge changes in the labor market, as well as in ways of assess­ing and compensating women's reproductive activities. In recent years, much literature has been generated Jia Nan is Assistant Professor at Southwest University of Finance and Economics in Sichuan, Chengdu Province. Dong Xiao-yuan is Professor of Economics at the University of Winnipeg, Canada, Adjunct Professor at Beijing University, member of the board of directors of the International Association of Feminist Economics and Associate editor of Feminist Economics .