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Does the cost of child care affect female labor market participation? An evaluation of a French reform of childcare subsidies

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  • Givord, Pauline
  • Marbot, Claire

Abstract

This study evaluates the short-run impact of an increase in childcare subsidies on the use of paid childcare and the participation rate of mothers of preschool children. We use a natural experiment provided by the PAJE, a French reform in family allowances introduced in 2004. This reform temporarily creates discrepancies in the childcare subsidies received by families according to the year of birth of the children. We apply a difference-in-differences strategy on exhaustive French fiscal data that provide information on gross income as well as on the use of paid childcare services between 2005 and 2008. We use the fact that the new policy results in a significant increase in the use of paid childcare services. The effect on the labor force participation of mothers is significant but of a smaller magnitude. The highest impact is observed for mothers of large families.

Suggested Citation

  • Givord, Pauline & Marbot, Claire, 2015. "Does the cost of child care affect female labor market participation? An evaluation of a French reform of childcare subsidies," Labour Economics, Elsevier, vol. 36(C), pages 99-111.
    • Handle: RePEc:eee:labeco:v:36:y:2015:i:c:p:99-111
    DOI: 10.1016/j.labeco.2015.07.003
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    More about this item

    Keywords

    Mother's labor supply; Child care subsidy; Difference-in-differences;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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