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', allowing two children if one parent was a single child; in 2015 a decision was made to allow any couple two children, and in 2016 the universal two-child policy was fully implemented. Using female employment data disclosed by Chinese listed companies from 2010 to 2020, this study builds a two-way fixed-effect model (time and industry) to test the impact of the two-child policy on female employment and corporate performance. The higher the proportion of female workers, the better firm performance. Expanding the two-child policy scope did not reduce the proportion of female employment, but it weakened the positive effect of hiring female employees on performance. Firms with higher female employment exhibited lower costs, and this low-cost effect disappears as the second-child policy expands, indicating the economic benefits of female employment result from wage discrimination. The study offers a basis for safeguarding women’s reproductive and fair employment rights and promoting sustainable social development.