IDEAS home Printed from https://ideas.repec.org/p/aut/wpaper/201805.html
   My bibliography  Save this paper

Evaluating the Impact of 20 Hours Free Early Childhood Education on Mothers’ Labour Force Participation and Earnings

Author

Listed:
  • Isabelle Bouchard

    (HEC Montreal)

  • Lydia Cheung

    (School of Economics, Auckland University of Technology)

  • Gail Pacheco

    (New Zealand Work Research Institute, Faculty of Business, Economics and Law, Auckland University of Technology)

Abstract

New Zealand introduced a substantial childcare subsidy just over a decade ago, providing 20 hours free early childhood education (ECE) to all three- and four-year-olds. We evaluate the impact of this policy shift on mothers’ labour market participation and earnings. Using a difference-in-differences strategy and population-wide administrative panel data, we follow mothers’ quarterly earnings from pre-pregnancy to six years post-childbirth. The estimated impact of the ECE reform varies depending on the number of children eligible. For mothers with one child, there is some evidence of a drop in labour market participation and earnings, which potentially indicates this group is using the savings in ECE expenditure, a gain in real income, to consume more non-work time. For mothers with two eligible children, there is an increase in labour market participation, potentially because these households find it more worthwhile to increase ECE consumption and return to work when there are two children who benefit from the policy.

Suggested Citation

  • Isabelle Bouchard & Lydia Cheung & Gail Pacheco, 2018. "Evaluating the Impact of 20 Hours Free Early Childhood Education on Mothers’ Labour Force Participation and Earnings," Working Papers 2018-05 JEL Classificatio, Auckland University of Technology, Department of Economics, revised Jul 2020.
    • Handle: RePEc:aut:wpaper:201805
    as

    Download full text from publisher

    File URL: https://www.aut.ac.nz/__data/assets/pdf_file/0010/187129/18_05-WP-update.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Deborah J. Anderson & Melissa Binder & Kate Krause, 2002. "The Motherhood Wage Penalty: Which Mothers Pay It and Why?," American Economic Review, American Economic Association, vol. 92(2), pages 354-358, May.
    2. Inés Hardoy & Pål Schøne, 2015. "Enticing even higher female labor supply: the impact of cheaper day care," Review of Economics of the Household, Springer, vol. 13(4), pages 815-836, December.
    3. Katharina Wrohlich, 2004. "Child Care Costs and Mothers' Labor Supply: An Empirical Analysis for Germany," Discussion Papers of DIW Berlin 412, DIW Berlin, German Institute for Economic Research.
    4. 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.
    5. Jean Kimmel, 1998. "Child Care Costs As A Barrier To Employment For Single And Married Mothers," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 287-299, May.
    6. Gail Pacheco & Chao Li & Bill Cochrane, 2017. "Empirical evidence of the gender pay gap in NZ," Working Papers 2017-05, Auckland University of Technology, Department of Economics.
    7. Lundin, Daniela & Mörk, Eva & Öckert, Björn, 2008. "How far can reduced childcare prices push female labour supply?," Labour Economics, Elsevier, vol. 15(4), pages 647-659, August.
    8. Charles Baum, 2002. "A dynamic analysis of the effect of child care costs on the work decisions of low-income mothers with infants," Demography, Springer;Population Association of America (PAA), vol. 39(1), pages 139-164, February.
    9. Michael Baker & Jonathan Gruber & Kevin Milligan, 2008. "Universal Child Care, Maternal Labor Supply, and Family Well-Being," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 709-745, August.
    10. 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.
    11. Haeck, Catherine & Lefebvre, Pierre & Merrigan, Philip, 2015. "Canadian evidence on ten years of universal preschool policies: The good and the bad," Labour Economics, Elsevier, vol. 36(C), pages 137-157.
    12. 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, July.
    13. Blau, David & Currie, Janet, 2006. "Pre-School, Day Care, and After-School Care: Who's Minding the Kids?," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 2, chapter 20, pages 1163-1278, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yu Qian & Xiurong Gu & Hui Li, 2022. "Is Free Early Childhood Education a Sustainable Solution? Evidence from the Case Study of Nanjing," Sustainability, MDPI, vol. 14(11), pages 1-13, May.
    2. Thomas Benison & Isabelle Sin, 2023. "The wage cost of a lack of access to affordable childcare in Aotearoa New Zealand," Working Papers 23_02, Motu Economic and Public Policy Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christoph Zangger & Janine Widmer & Sandra Gilgen, 2021. "Work, Childcare, or Both? Experimental Evidence on the Efficacy of Childcare Subsidies in Raising Parental Labor Supply," Journal of Family and Economic Issues, Springer, vol. 42(3), pages 449-472, September.
    2. Müller, Kai-Uwe & Wrohlich, Katharina, 2020. "Does subsidized care for toddlers increase maternal labor supply? Evidence from a large-scale expansion of early childcare," Labour Economics, Elsevier, vol. 62(C).
    3. Huebener, Mathias & Pape, Astrid & Spiess, C. Katharina, 2020. "Parental labour supply responses to the abolition of day care fees," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 510-543.
    4. Y.E. Akgündüz & J. Plantenga, 2015. "Childcare Prices and Maternal Employment: a Meta-Analysis," Working Papers 15-14, Utrecht School of Economics.
    5. Anna Lovász & Ágnes Szabó-Morvai, 2019. "Childcare availability and maternal labor supply in a setting of high potential impact," Empirical Economics, Springer, vol. 56(6), pages 2127-2165, June.
    6. Jennifer Glass & Carolyn E. Waldrep, 2023. "Child Allowances and Work-Family Reconciliation Policies: What Best Reduces Child Poverty and Gender Inequality While Enabling Desired Fertility?," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 42(5), pages 1-57, October.
    7. Eckhoff Andresen, Martin & Havnes, Tarjei, 2019. "Child care, parental labor supply and tax revenue," Labour Economics, Elsevier, vol. 61(C).
    8. BOUSSELIN Audrey, 2019. "Expanding access to universal childcare: Effects on childcare arrangements and maternal employment," LISER Working Paper Series 2019-11, Luxembourg Institute of Socio-Economic Research (LISER).
    9. Bauernschuster, Stefan & Schlotter, Martin, 2015. "Public child care and mothers' labor supply—Evidence from two quasi-experiments," Journal of Public Economics, Elsevier, vol. 123(C), pages 1-16.
    10. Felfe, Christina & Lechner, Michael & Thiemann, Petra, 2016. "After-school care and parents' labor supply," Labour Economics, Elsevier, vol. 42(C), pages 64-75.
    11. Taryn W. Morrissey, 2017. "Child care and parent labor force participation: a review of the research literature," Review of Economics of the Household, Springer, vol. 15(1), pages 1-24, March.
    12. Daniela Vuri, 2016. "Do childcare policies increase maternal employment?," IZA World of Labor, Institute of Labor Economics (IZA), pages 241-241, March.
    13. Ella Shachar, 2022. "A longitudinal Study of the Effect of Subsidized Child Care on Maternal Earnings," Israel Economic Review, Bank of Israel, vol. 20(1), pages 27-50.
    14. Elizabeth E. Davis & Caroline Carlin & Caroline Krafft & Nicole D. Forry, 2018. "Do Child Care Subsidies Increase Employment Among Low-Income Parents?," Journal of Family and Economic Issues, Springer, vol. 39(4), pages 662-682, December.
    15. Brewer, Mike & Cattan, Sarah & Crawford, Claire & Rabe, Birgitta, 2022. "Does more free childcare help parents work more?," Labour Economics, Elsevier, vol. 74(C).
    16. Christina Gathmann & Björn Sass, 2018. "Taxing Childcare: Effects on Childcare Choices, Family Labor Supply, and Children," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 665-709.
    17. Kunze, Astrid & Liu, Xingfei, 2019. "Universal Childcare for the Youngest and the Maternal Labour Supply," Working Papers 2019-1, University of Alberta, Department of Economics.
    18. Delia Furtado, 2015. "Can immigrants help women “have it all”? Immigrant labor and women’s joint fertility and labor supply decisions," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-19, December.
    19. de Boer, Henk-Wim & Jongen, Egbert L.W. & Kabatek, Jan, 2022. "The effectiveness of fiscal stimuli for working parents," Labour Economics, Elsevier, vol. 76(C).
    20. Shintaro Yamaguchi, 2016. "Family Policies and Female Employment in Japan," Department of Economics Working Papers 2016-06, McMaster University.

    More about this item

    Keywords

    Early childhood education; difference-in-differences; mothers' earnings; intertemporal substitution; administrative data;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aut:wpaper:201805. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gail Pacheco (email available below). General contact details of provider: https://edirc.repec.org/data/fbautnz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.