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Childcare subsidies and labour supply — Evidence from a large Dutch reform

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  • Bettendorf, Leon J.H.
  • Jongen, Egbert L.W.
  • Muller, Paul

Abstract

After the introduction of the Law on Childcare in 2005, childcare subsidies in the Netherlands became much more generous. Public spending on childcare increased from 1 to 3 billion euro over the period 2004–2009. Using a differences-in-differences strategy we find that, despite the substantial budgetary outlay, this reform had only a modest impact on employment. Furthermore, the rather small effects we find are likely confounded by a coincident increase in the EITC for parents with young children of 0.6 billion euro, which presumably also served to increase the labour supply of the group. The joint reform increased the maternal employment rate by 2.3 percentage points (3.0%) and maternal hours worked by 1.1h per week (6.2%). The results further suggest that the reform slightly reduced hours worked by fathers.

Suggested Citation

  • Bettendorf, Leon J.H. & Jongen, Egbert L.W. & Muller, Paul, 2015. "Childcare subsidies and labour supply — Evidence from a large Dutch reform," Labour Economics, Elsevier, vol. 36(C), pages 112-123.
  • Handle: RePEc:eee:labeco:v:36:y:2015:i:c:p:112-123
    DOI: 10.1016/j.labeco.2015.03.007
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    More about this item

    Keywords

    Childcare subsidies; Labour force participation; Differences-in-differences;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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