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Money for nothing? Universal child care and maternal employment

  • Havnes, Tarjei
  • Mogstad, Magne

The strong correlation between child care and maternal employment rates has led previous research to conclude that affordable and readily available child care is a driving force both of cross-country differences in maternal employment and of its rapid growth over the last decades. We analyze a staged expansion of subsidized child care in Norway. Our precise and robust difference-in-differences estimates reveal that there is little, if any, causal effect of subsidized child care on maternal employment, despite a strong correlation. Instead of increasing mothers' labor supply, the new subsidized child care mostly crowds out informal child care arrangements, suggesting a significant net cost of the child care subsidies.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 95 (2011)
Issue (Month): 11 ()
Pages: 1455-1465

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Handle: RePEc:eee:pubeco:v:95:y:2011:i:11:p:1455-1465
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