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Unintended Consequences of Childcare Regulation in Chile: Evidence from a Regression Discontinuity Design

Author

Listed:
  • Villena, Mauricio G.
  • Sanchez, Rafael
  • Rojas, Eugenio

Abstract

In several countries governments fund childcare provision, but in many others it is privately funded as labour regulation mandates that firms have to provide childcare services. For this latter case, there is no empirical evidence on the effects generated by the financial burden of childcare provision. In particular, there is no evidence about who effectively pays (i.e. firms or employees) and how it pays (i.e. via wages and/or employment). This study is the first one to provide such evidence. Our hypothesis is that, in imperfect labour markets (e.g. oligopsonistic), firms will transfer childcare cost on to their workers. To analyze this, we exploit a discontinuity on childcare provision mandated by Chilean labour regulation. Our results suggest that firms transfer entirely the cost of childcare (nearly 100%) to their workers via lower wages (not only to female but also to male workers) and not through the alteration of the share of male workers within the firm. This is consistent with our finding that firms do not manipulate the threshold (number of female workers) because they avoid the burden by transfering the cost to their employees.

Suggested Citation

  • Villena, Mauricio G. & Sanchez, Rafael & Rojas, Eugenio, 2011. "Unintended Consequences of Childcare Regulation in Chile: Evidence from a Regression Discontinuity Design," MPRA Paper 62096, University Library of Munich, Germany, revised 10 Feb 2015.
  • Handle: RePEc:pra:mprapa:62096
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    File URL: https://mpra.ub.uni-muenchen.de/62096/1/MPRA_paper_62096.pdf
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    References listed on IDEAS

    as
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    5. 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.
    6. Blau, David M. & Tekin, Erdal, 2001. "The Determinants and Consequences of Child Care Subsidies for Single Mothers," IZA Discussion Papers 383, Institute for the Study of Labor (IZA).
    7. Jens Ludwig & Douglas L. Miller, 2007. "Does Head Start Improve Children's Life Chances? Evidence from a Regression Discontinuity Design," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 159-208.
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    Cited by:

    1. María Fernanda Prada & Graciana Rucci & Sergio Urzúa, 2015. "The Effect of Mandated Child Care on Female Wages in Chile," IDB Publications (Working Papers) 6880, Inter-American Development Bank.
    2. María F. Prada & Graciana Rucci & Sergio S. Urzúa, 2015. "The Effect of Mandated Child Care on Female Wages in Chile," NBER Working Papers 21080, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Childcare; Labour Regulation; Labour Tax; Gender; Female workers.;

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • J0 - Labor and Demographic Economics - - General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J8 - Labor and Demographic Economics - - Labor Standards

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