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Money for Nothing? Universal Child Care and Maternal Employment

  • Havnes, Tarjei

    ()

    (University of Oslo)

  • Mogstad, Magne

    ()

    (University of Chicago)

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 the introduction of subsidized, universally accessible child care in Norway. Our precise and robust difference-in-differences estimates reveal that there is little, if any, causal effect of 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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4504.

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Length: 32 pages
Date of creation: Oct 2009
Date of revision:
Publication status: published in: Journal of Public Economics, 2011, 95 (11-12), 1455-1465
Handle: RePEc:iza:izadps:dp4504
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