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Enticing even higher female labor supply: the impact of cheaper day care

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  • Inés Hardoy
  • Pål Schøne

Abstract

We ask whether cheaper child care can spur labor supply of mothers in an economy with high female labor supply. We exploit exogenous variation in child care prices induced by a public reform. A triple difference approach is put forward. The results show that reduced child care prices led to a rise in labor supply of mothers by approximately 5 %. A “back-of-the-envelope” calculation estimates an elasticity of approximately −0.25, which is at the lower end compared to other studies, suggesting that labor supply is less elastic when female employment is high. Since a capacity-increase was introduced at the same time, the positive labor supply effect may be a result of both reduced prices and increased capacity. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Inés Hardoy & Pål Schøne, 2015. "Enticing even higher female labor supply: the impact of cheaper day care," Review of Economics of the Household, Springer, vol. 13(4), pages 815-836, December.
    • Handle: RePEc:kap:reveho:v:13:y:2015:i:4:p:815-836
    DOI: 10.1007/s11150-013-9215-8
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    Cited by:

    1. Finlay, Jocelyn E., 2021. "Women’s reproductive health and economic activity: A narrative review," World Development, Elsevier, vol. 139(C).
    2. Reo Takaku, 2019. "The wall for mothers with first graders: availability of afterschool childcare and continuity of maternal labor supply in Japan," Review of Economics of the Household, Springer, vol. 17(1), pages 177-199, March.
    3. Anna Lovász & Ágnes Szabó-Morvai, 2019. "Childcare availability and maternal labor supply in a setting of high potential impact," Empirical Economics, Springer, vol. 56(6), pages 2127-2165, June.
    4. Elizabeth E. Davis & Caroline Carlin & Caroline Krafft & Nicole D. Forry, 2018. "Do Child Care Subsidies Increase Employment Among Low-Income Parents?," Journal of Family and Economic Issues, Springer, vol. 39(4), pages 662-682, December.
    5. Daniela Del Boca, 2015. "The impact of child care costs and availability on mothers’ labor supply," ImPRovE Working Papers 15/04, Herman Deleeck Centre for Social Policy, University of Antwerp.
    6. Isabelle Bouchard & Lydia Cheung & Gail Pacheco, 2021. "Evaluating the impact of 20 hours free early childhood education on mothers’ labour force participation and earnings," New Zealand Economic Papers, Taylor & Francis Journals, vol. 55(2), pages 188-202, May.
    7. Marc Jourdain Muizon, 2020. "Subsidies for parental leave and formal childcare: be careful what you wish for," Review of Economics of the Household, Springer, vol. 18(3), pages 735-772, September.
    8. Christoph Zangger & Janine Widmer & Sandra Gilgen, 2021. "Work, Childcare, or Both? Experimental Evidence on the Efficacy of Childcare Subsidies in Raising Parental Labor Supply," Journal of Family and Economic Issues, Springer, vol. 42(3), pages 449-472, September.
    9. Selina Gangl & Martin Huber, 2021. "From homemakers to breadwinners? How mandatory kindergarten affects maternal labour market outcomes," Papers 2111.14524, arXiv.org, revised Mar 2022.
    10. Sarah Sander, 2024. "Universal Daycare and Mothers Working Lifetime," CEBI working paper series 24-13, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    11. Gangl, Selina & Huber, Martin, 2021. "From homemakers to breadwinners? How mandatory kindergarten affects maternal labour market attachment," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203636, Verein für Socialpolitik / German Economic Association, revised 2021.
    12. Jennifer Glass & Carolyn E. Waldrep, 2023. "Child Allowances and Work-Family Reconciliation Policies: What Best Reduces Child Poverty and Gender Inequality While Enabling Desired Fertility?," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 42(5), pages 1-57, October.
    13. BOUSSELIN Audrey, 2019. "Expanding access to universal childcare: Effects on childcare arrangements and maternal employment," LISER Working Paper Series 2019-11, Luxembourg Institute of Socio-Economic Research (LISER).
    14. D. Vandelannoote & P. Vanleenhove & A. Decoster & J. Ghysels & G. Verbist, 2015. "Maternal employment: the impact of triple rationing in childcare," Review of Economics of the Household, Springer, vol. 13(3), pages 685-707, September.
    15. Taryn W. Morrissey, 2017. "Child care and parent labor force participation: a review of the research literature," Review of Economics of the Household, Springer, vol. 15(1), pages 1-24, March.
    16. Henning Finseraas & Inés Hardoy & Pål Schøne, 2017. "School enrolment and mothers’ labor supply: evidence from a regression discontinuity approach," Review of Economics of the Household, Springer, vol. 15(2), pages 621-638, June.

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    More about this item

    Keywords

    Labor supply; Family policy; Child care costs; Difference-in-differences-in-differences; J13; J18; J22;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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