The impact of childcare enrollment on women’s selection into self-employment

Women carry on to provide substantially more work in the household compared to men despite increasing female labor force participation. This inequality in household production can be considered an informal institution that may affect occupational choices of women. This paper argues that such informal institutional arrangements cause adverse selection into selfemployment among women since the promise of flexibly combining household production and labor force participation offered by self-employment is more appealing to women than men. However, formal institutions like childcare arrangements outside the household may reduce such adverse selection. We hypothesize that childcare availability influences the selection of females into self-employment conditional on the frequency of young children in households. Our empirical evidence suggests that better childcare availability causes fewer women to enter self-employment but those that enter tend to have higher levels of formal education and hire more often employees.