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Money for nothing? Universal child care and maternal employment

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  • Havnes, Tarjei
  • Mogstad, Magne

Abstract

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.

Suggested Citation

  • Havnes, Tarjei & Mogstad, Magne, 2011. "Money for nothing? Universal child care and maternal employment," Journal of Public Economics, Elsevier, vol. 95(11), pages 1455-1465.
    • Handle: RePEc:eee:pubeco:v:95:y:2011:i:11:p:1455-1465
    DOI: 10.1016/j.jpubeco.2011.05.016
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    More about this item

    Keywords

    Universal child care; Child care subsidies; Maternal employment;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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