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Evaluating the Impact of 20 Hours Free Early Childhood Education on Mothers’ Labour Force Participation and Earnings

Author

Listed:
  • Isabelle Bouchard

    (HEC Montreal)

  • Lydia Cheung

    (School of Economics, Auckland University of Technology)

  • Gail Pacheco

    (New Zealand Work Research Institute, Faculty of Business, Economics and Law, Auckland University of Technology)

Abstract

New Zealand introduced a substantial childcare subsidy just over a decade ago, providing 20 hours free early childhood education (ECE) to all three- and four-year-olds. We evaluate the impact of this policy shift on mothers’ labour market participation and earnings. Using a difference-in-differences strategy and population-wide administrative panel data, we follow mothers’ quarterly earnings from pre-pregnancy to six years post-childbirth. The estimated impact of the ECE reform varies depending on the number of children eligible. For mothers with one child, there is some evidence of a drop in labour market participation and earnings, which potentially indicates this group is using the savings in ECE expenditure, a gain in real income, to consume more non-work time. For mothers with two eligible children, there is an increase in labour market participation, potentially because these households find it more worthwhile to increase ECE consumption and return to work when there are two children who benefit from the policy.

Suggested Citation

  • Isabelle Bouchard & Lydia Cheung & Gail Pacheco, 2018. "Evaluating the Impact of 20 Hours Free Early Childhood Education on Mothers’ Labour Force Participation and Earnings," Working Papers 2018-05 JEL Classificatio, Auckland University of Technology, Department of Economics, revised Jul 2020.
    • Handle: RePEc:aut:wpaper:201805
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    References listed on IDEAS

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    Cited by:

    1. Yu Qian & Xiurong Gu & Hui Li, 2022. "Is Free Early Childhood Education a Sustainable Solution? Evidence from the Case Study of Nanjing," Sustainability, MDPI, vol. 14(11), pages 1-13, May.
    2. 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.

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    More about this item

    Keywords

    Early childhood education; difference-in-differences; mothers' earnings; intertemporal substitution; administrative data;
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