The arrival of a child changes everything. For many families, it means sleepless nights, new routines, and the joy of watching a tiny person grow. But it also brings something less welcome: a sharp hit to household income. Economists call this the “child penalty.”
The penalty doesn’t fall equally. Mothers usually shoulder the biggest losses, as their working hours and career paths adjust to new caring responsibilities. Single parents often face even steeper challenges, as there is no second income to cushion the blow.
Drawing on 20 years of Australian data, our new study asks a deceptively simple question: how well do our tax and transfer policies protect families from this penalty?