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

Author

Listed:
  • Leon Bettendorf

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Egbert Jongen

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Paul Muller

    (VU/Tinbergen)

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.

Suggested Citation

  • Leon Bettendorf & Egbert Jongen & Paul Muller, 2012. "Childcare subsidies and labour supply: evidence from a large Dutch reform," CPB Discussion Paper 217, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:discus:217
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    References listed on IDEAS

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    Cited by:

    1. Asai, Yukiko, 2015. "Parental leave reforms and the employment of new mothers: Quasi-experimental evidence from Japan," Labour Economics, Elsevier, vol. 36(C), pages 72-83.
    2. H. W. Boer, 2016. "For Better or for Worse: Tax Reform in the Netherlands," De Economist, Springer, vol. 164(2), pages 125-157, June.
    3. Henk-Wim de Boer & Egbert Jongen & Jan Kabatek, 2014. "The effectiveness of fiscal stimuli for working parents," CPB Discussion Paper 286, CPB Netherlands Bureau for Economic Policy Analysis.
    4. 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.
    5. Henk-Wim de Boer & Egbert Jongen & Jan Kabatek, 2014. "The effectiveness of fiscal stimuli for working parents," CPB Discussion Paper 286.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Eva Lloyd, 2014. "Can Government Intervention in Childcare be Justified?," Economic Affairs, Wiley Blackwell, vol. 34(3), pages 402-405, October.
    7. Y.E. Akgündüz & J. 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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    More about this item

    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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