Nursery school subsidies for particularly young children: Impacts on maternal labor market and fertility outcomes

• In Event: Work, Care Work, and Policy Design: Reimagining Labor Supports Across Contexts

Abstract

Background: Research dedicated to the study of gender gaps in the labor market confirms the existence of a motherhood penalty, where wages of similar men and women start equal and only diverge around the birth of a child. In this context, nursery school subsidies, which make outsourcing of childcare more affordable, potentially allow the primary caregiver - usually still the mother - to dedicate less time to the daily care of the child and more time to labor. At the same time, affordable formal childcare has potentially positive effects on fertility decisions, yet any resulting further incorporation of mothers in the labor market could also have a deterrent effect on fertility. This study estimates the effects of a large-scale center-based nursery school subsidy program on maternal labor market and fertility outcomes.

Notably, most of the literature on this topic studies labor market participation of mothers with children aged 3 to 6, which coincides with the introduction of free schooling. However, the estimated motherhood penalty effects start to accumulate in the first year of maternity. One would therefore expect interventions in these crucial early years to be particularly important. The longer mothers are away from the labor market, the more difficult one would expect it to be for successful re-entry. On the other hand, parents may have stronger preferences regarding the use of formal schooling or childcare at particularly young ages. We therefore contribute to the larger literature by estimating impacts for these crucial early years that have been studied to a much lesser degree in the literature, especially considering their potential importance.

Methods: The focus of this study is on the generous subsidy program in Spain called the “Cheque Guardería” (or the “Preschool Check”), that consists of a monthly subsidy paid to mothers of children aged 0-3, notably starting in the immediate years after birth, for use in center-based nursery schools. We make use of a large administrative dataset - the Continuous Sample of Working Lives (CSWL) along with eligibility rules based on a strict child birthdate cutoff to estimate the causal effect of receiving an additional year of subsidies on maternal outcomes. Causal identification therefore comes from comparing women with a child who was born right after the cut-off date to those with a child born right before the cut-off date.

Results: We find that formal childcare subsidies in the first year of a child’s life resulted in a greater probability of full-time and permanent employment. These findings are driven by lower-educated and lower-income mothers. We find no consistent effects of the subsidy on fertility.

Discussion:Our study fills a notable gap in the literature on childcare subsidies and maternal outcomes by studying subsidies provided at ages younger than 3 years old, which is earlier than most of the literature. As far as we are aware, this is the first study to estimate the causal impact of formal childcare subsidies as early as the first year of life.

Author

• Jennifer Graves, Universidad Autónoma de Madrid
  Presenting Author