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Childcare subsidies and labour supply: evidence from a large Dutch reform

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  • Leon Bettendorf

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  • Egbert Jongen

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  • Paul Muller (University Amsterdam/Tinbergen)
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    Abstract

    Over the period 2005-2009 the Dutch government increased childcare subsidies substantially, reducing the average effective parental fee by 50%, and extended subsidies to so-called guestparent care. We estimate the labour supply effect of this reform with a difference-in-differences strategy, using parents with older children as a control group. We find that the reform had a moderately sized impact on labour supply. Furthermore, the effects are an upper bound since there was also an increase in an earned income tax credit for the same treatment group over the same period. The joint reform increased the maternal employment rate by 2.3%-points (3.0%). Average hours worked by mothers increased by 1.1 hours per week (6.2%). Decomposing the hours effect we find that most of the increase in hours is due to the intensive margin response. A number of robustness checks confirm our results. �

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    Bibliographic Info

    Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 217.

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    Date of creation: Sep 2012
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    Handle: RePEc:cpb:discus:217

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    1. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    2. Jonah B. Gelbach, 2002. "Public Schooling for Young Children and Maternal Labor Supply," American Economic Review, American Economic Association, vol. 92(1), pages 307-322, March.
    3. Pierre Lefebvre & Philip Merrigan, 2008. "Child-Care Policy and the Labor Supply of Mothers with Young Children: A Natural Experiment from Canada," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 519-548, 07.
    4. Elizabeth U. Cascio, 2009. "Maternal Labor Supply and the Introduction of Kindergartens into American Public Schools," Journal of Human Resources, University of Wisconsin Press, vol. 44(1).
    5. Kevin E. Staub, 2014. "A Causal Interpretation of Extensive and Intensive Margin Effects in Generalized Tobit Models," The Review of Economics and Statistics, MIT Press, vol. 96(2), pages 371-375, May.
    6. McDonald, John F & Moffitt, Robert A, 1980. "The Uses of Tobit Analysis," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 318-21, May.
    7. Blundell, Richard & Costa Dias, Monica, 2008. "Alternative Approaches to Evaluation in Empirical Microeconomics," IZA Discussion Papers 3800, Institute for the Study of Labor (IZA).
    8. Havnes, Tarjei & Mogstad, Magne, 2009. "Money for Nothing? Universal Child Care and Maternal Employment," Memorandum 24/2009, Oslo University, Department of Economics.
    9. Michael Baker & Jonathan Gruber & Kevin Milligan, 2006. "Universal Childcare, Maternal Labor Supply, and Family Well-Being," Working Papers id:547, eSocialSciences.
    10. Tarjei Havnes & Magne Mogstad, 2011. "No Child Left Behind: Subsidized Child Care and Children's Long-Run Outcomes," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 97-129, May.
    11. Maria Fitzpatrick, 2008. "Preschoolers Enrolled and Mothers at Work? The Effects of Universal Pre-Kindergarten," Discussion Papers 08-001, Stanford Institute for Economic Policy Research.
    12. Nollenberger, Natalia & Rodríguez-Planas, Núria, 2011. "Child Care, Maternal Employment and Persistence: A Natural Experiment from Spain," IZA Discussion Papers 5888, Institute for the Study of Labor (IZA).
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    Cited by:
    1. Y. Emre Akgunduz & Janneke Plantenga, 2013. "Competition for a better future? Effects of competition on child care quality," Working Papers 13-14, Utrecht School of Economics.

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