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Does Childcare Matter for Maternal Labor Supply? Pushing the limits of the Regression Discontinuity Framework

  • Anna Lovasz

    ()

    (Institute of Economics, Center for Economic and Regional Studies, Hungarian Academy of Sciences)

  • Agnes Szabo-Morvai

    ()

    (Central European University and HTFA Research Institute)

We use an extension of the RD approach based on a kindergarten enrollment cutoff date and a new resampling design to estimate the causal impact of subsidized childcare availability on Hungarian mothers' labor market participation around the 3rd birthday of the child. Besides standard fuzzy RD, which holds calendar time constant, we apply an alternative version where child's age is held constant, which enables us to (a) separate the childcare effect from other, age-specific effects, and (b) consider the effect of not only point, but interval cutoffs for eligibility. We combine RD with a difference-in-differences approach using a comparison group of mothers with children aged 4-5 to control for seasonal effects (parent selection, child development, within-year labor market fluctuations). Our estimates indicate that a mother with a 3 year old is 15% more likely to be active if her child is eligible for subsidized kindergarten, corresponding to previous estimates of labor supply elasticity of 0.3-0.75. This suggests that increased subsidized childcare availability and parental leave alone cannot explain the sharp increase in the rate of maternal participation seen around children's 3rd birthday, highlighting the importance of other factors such as separation preferences and flexible work forms.

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Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series Budapest Working Papers on the Labour Market with number 1313.

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Length: 45 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:has:bworkp:1313
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  1. Maria Fitzpatrick, 2008. "Preschoolers Enrolled and Mothers at Work? The Effects of Universal Pre-Kindergarten," Working Papers 08-04, Center for Economic Studies, U.S. Census Bureau.
  2. Lisa M. Powell, 2002. "Joint Labor Supply and Childcare Choice Decisions of Married Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 37(1), pages 106-128.
  3. A. Chevalier & T. K. Viitanen, 2002. "The causality between female labour force participation and the availability of childcare," Applied Economics Letters, Taylor & Francis Journals, vol. 9(14), pages 915-918.
  4. Lokshin, Michael M., 1999. "Household childcare choices and women's work behavior in Russia," Policy Research Working Paper Series 2206, The World Bank.
  5. Haan, Peter & Wrohlich, Katharina, 2009. "Can Child Care Policy Encourage Employment and Fertility? Evidence from a Structural Model," IZA Discussion Papers 4503, Institute for the Study of Labor (IZA).
  6. David E. Bloom & David Canning & Günther Fink & Jocelyn E. Finlay, 2007. "Fertility, Female Labor Force Participation, and the Demographic Dividend," NBER Working Papers 13583, National Bureau of Economic Research, Inc.
  7. 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, 07.
  8. Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report 239, Federal Reserve Bank of Minneapolis.
  9. Apps, Patricia & Rees, Ray, 2001. "Fertility, Female Labor Supply and Public Policy," IZA Discussion Papers 409, Institute for the Study of Labor (IZA).
  10. Cristina Borra, 2010. "Childcare cost and Spanish mother’s labour force participation," Hacienda Pública Española, IEF, vol. 194(3), pages 9-40, October.
  11. Philippe Choné & David le Blanc & Isabelle Robert-Bobée, 2003. "Female Labor Supply and Child Care in France," CESifo Working Paper Series 1059, CESifo Group Munich.
  12. Jonah B. Gelbach, 2002. "Public Schooling for Young Children and Maternal Labor Supply," American Economic Review, American Economic Association, vol. 92(1), pages 307-322, March.
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