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The wage cost of a lack of access to affordable childcare in Aotearoa New Zealand

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  • Thomas Benison
  • Isabelle Sin

Abstract

Access to suitable and affordable childcare is a prerequisite for labour force participation for many mothers. We use data from the Growing Up in New Zealand longitudinal study to investigate how lack of access to childcare affects mothers’ work in New Zealand, a nation with high-quality but expensive childcare. We find many mothers whose young children are not in childcare due to a lack of access report being prevented from working by childcare access issues. However, just over a fifth of mothers whose children are not in care due to access issues do work, and some mothers whose children are in care still report they are unable to work due to childcare issues. By combining information on work status and reasons for not working with earnings data for working mothers of young children, we estimate New Zealand mothers with children under age three who are not working only because they can’t access childcare may be foregoing an average of $1,970 each per year. This equates to total foregone earnings of $116 million per year, presenting a considerable cost to the New Zealand economy.

Suggested Citation

  • Thomas Benison & Isabelle Sin, 2024. "The wage cost of a lack of access to affordable childcare in Aotearoa New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 58(1), pages 40-73, January.
    • Handle: RePEc:taf:nzecpp:v:58:y:2024:i:1:p:40-73
    DOI: 10.1080/00779954.2023.2278039
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    1. Brewer, Mike & Cattan, Sarah & Crawford, Claire & Rabe, Birgitta, 2022. "Does more free childcare help parents work more?," Labour Economics, Elsevier, vol. 74(C).
    2. 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.
    3. 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.
    4. Eckhoff Andresen, Martin & Havnes, Tarjei, 2019. "Child care, parental labor supply and tax revenue," Labour Economics, Elsevier, vol. 61(C).
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    More about this item

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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