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This paper studies the effect of childbirth on the motherhood wage penalty by exploiting a unique empirical setting: China's relaxation of the one-child policy. Using data from executives of Chinese listed firms, we find that relaxation of the one-child policy exacerbates the motherhood penalty at the executive level. This is caused by both actual childbirth and employers' concern about potential future childbirth. In addition, we document that corporate digitalization can effectively mitigate the worsened motherhood penalty. The mitigation effect is greater for decision-maker positions, for firms with established gender-friendly cultures, and for firms that focus on the types of digitalization that enhance workflow flexibility. Our findings highlight the role of technological advances in resolving the gender issue in labor market and speak to the prevalence and severity of the motherhood penalty.

wlareina@ceibs.edu