Work Requirements in Subsidized Child Care and Maternal Labor Supply

This paper investigates how tightening work requirements in subsidized child care affects parental employment. Using Dutch administrative data, we examine a 2012 reform that capped subsidized child care hours at 140% of the hours worked by the lesser-working parent. We identify affected households by creating proxy treatment and control groups based on older siblings’ pre-reform child care usage relative to the lesser-working parent’s work hours, then employ a triple-difference framework comparing virtually constrained and non-constrained families with and without younger siblings before and after the reform. Our findings reveal a pronounced gender difference in responses to stricter work requirements: fathers showed negligible changes, while mothers responded at both employment margins. At the extensive margin, many mothers exited the labor force, resulting in a persistent 12 percentage point decrease in maternal employment among affected families. At the intensive margin, some mothers increased their work hours to retain subsidies; these effects also persist over time. Child care use fell sharply, raising concerns about child development, especially for disadvantaged families. These findings demonstrate that intensifying work requirements can have unintended negative consequences on mothers’ workforce participation and family welfare, informing debates on welfare conditionality and child care policy.