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Does Subsidized Care for Toddlers Increase Maternal Labor Supply?: Evidence from a Large-Scale Expansion of Early Childcare

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  • Kai-Uwe Müller
  • Katharina Wrohlich

Abstract

Expanding public or publicly subsidized childcare has been a top social policy priority in many industrialized countries. It is supposed to increase fertility, promote children's development and enhance mothers' labor market attachment. In this paper, we analyze the causal effect of one of the largest expansions of subsidized childcare for children up to three years among industrialized countries on the employment of mothers in Germany. Identification is based on spatial and temporal variation in the expansion of publicly subsidized childcare triggered by two comprehensive childcare policy reforms. The empirical analysis is based on the German Microcensus that is matched to county level data on childcare availability. Based on our preferred specification which includes time and county fixed effects we find that an increase in childcare slots by one percentage point increases mothers' labor market participation rate by 0.2 percentage points. The overall increase in employment is explained by the rise in part-time employment with relatively long hours (20-35 hours per week). We do not find a change in full-time employment or lower part-time employment that is causally related to the childcare expansion. The effect is almost entirely driven by mothers with medium-level qualifications. Mothers with low education levels do not profit from this reform calling for a stronger policy focus on particularly disadvantaged groups in coming years.

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  • Kai-Uwe Müller & Katharina Wrohlich, 2018. "Does Subsidized Care for Toddlers Increase Maternal Labor Supply?: Evidence from a Large-Scale Expansion of Early Childcare," Discussion Papers of DIW Berlin 1747, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1747
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    2. Angelo Leogrande & Alberto Costantiello, 2023. "The Labor Force Participation Rate in the Context of ESG Models at World Level," Working Papers hal-04114330, HAL.
    3. Katrin Huber, 2019. "The role of the career costs of children for the effect of public child care on fertility and maternal employment," Working Papers 185, Bavarian Graduate Program in Economics (BGPE).
    4. Julia Bachtrögler & Julia Bock-Schappelwein & Paul Eckerstorfer & Peter Huber & Christine Mayrhuber & Mark Sommer & Gerhard Streicher, 2019. "Wachstumsfaktor Gleichstellung. Der ökonomische Nutzen von Gender Budgeting in Wien," WIFO Studies, WIFO, number 65741, February.
    5. 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.
    6. Julia Bachtrögler-Unger & Julia Bock-Schappelwein & Paul Eckerstorfer & Peter Huber & Christine Mayrhuber & Mark Sommer & Gerhard Streicher, 2020. "Die ökonomischen Auswirkungen einer Erhöhung der Gleichstellung von Frauen und Männern," WIFO Monatsberichte (monthly reports), WIFO, vol. 93(12), pages 899-908, December.
    7. Boll, Christina & Lagemann, Andreas, 2018. "Does culture trump money? Employment and childcare use of migrant and non-migrant mothers of pre-school children in Germany," HWWI Research Papers 187, Hamburg Institute of International Economics (HWWI).
    8. Boll, Christina & Lagemann, Andreas, 2018. "Does Culture Trump Money? Erwerbsverhalten und Kitanutzung von Müttern mit und ohne Migrationshintergrund in Deutschland," HWWI Research Papers 188, Hamburg Institute of International Economics (HWWI).
    9. Malte Sandner & Stephan L. Thomsen & Libertad González Luna, 2020. "Preventing child maltreatment: Beneficial side effects of public childcare provision," Economics Working Papers 1744, Department of Economics and Business, Universitat Pompeu Fabra.
    10. Bönke, Timm & Glaubitz, Rick & Göbler, Konstantin & Harnack, Astrid & Pape, Astrid & Wetter, Miriam, 2020. "Die Entwicklung und Prognose von Lebenserwerbseinkommen in Deutschland," Discussion Papers 2020/5, Free University Berlin, School of Business & Economics.

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    Keywords

    childcare provision; mother's labor supply; generalized difference-in-difference;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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