Impact of two-child policy on female employment and corporate performance: Empirical evidence from Chinese listed companies from 2010 to 2020

In 2013, the 'Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform' initiated the 'selective two-child policy', which allowed married couples to have two children if one of the parents was a single child. In the Fifth Plenary Session of the 18th Central Committee of the Communist Party of China in 2015, a decision was made to implement the policy that a couple can have two children; in 2016, the universal two-child policy was fully implemented. This study used female employment data disclosed by Chinese listed companies from 2010 to 2020, constructed a two-way fixed-effect model of time and industry, and empirically tested the impact of the two-child policy on female employment and corporate performance. The empirical test revealed that the higher the proportion of employed female workers, the better the firm's performance. Expanding the scope of the two-child policy exhibited no reduction in the proportion of female employment, but weakened the positive effect of hiring female employees on corporate performance. Specifically, we found that firms with higher rates of female employment exhibit lower costs, and this low-cost effect disappears with the expansion of the scope of the second-child policy. This indicates that the economic benefits of female employment for firms result from wage discrimination. This study provides a theoretical and practical basis for safeguarding women's reproductive and fair employment rights and promoting sustainable social development.