Childcare availability and female labor supply

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Childcare availability and female labor supply

• Anna Lovasz - Agnes Szabo-Morvai
• The impact of day-care services on mothers
  employment, fertility, and redistribution in
  Visegrad countries - Workshop
• Budapest, March 30-31, 2012

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Research question and literature

• How does the lack of formal childcare
  availability constrain female labor supply?
• International evidence that it does constrain
  AppsRees 2001 Kimmel 1992,2001 Lokshin 2004
• Who is most affected by constraint?
• By income, education level, region/settlement
  type, family status, age
• Is the market for private daycare stepping in
  where public is insufficient?
• Is this increasing inequality based on
  affordability?

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Relevance

• Policy issues
• Where to build kindergartens?
• Who should pay and how much for nurseries?
• Should market for private daycare be encouraged
  more (decrease administrative barriers, etc)?
• Labor market activity
• Bick, 2010 lack of subsidized childcare is a
  barrier to female labor supply
• Connelly, 1992 higher child care costs are the
  primary reason of lower participation rate of
  mothers
• ? Fertility
• Apps Rees, 2001, Del Boca and Sauer, 2009
  countries with better prospects for mothers of
  small children (availability of childcare and
  flexible jobs), have higher female labor supply
  and fertility rate

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Childcare availability
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Data

• Combine three data sources, Hungary 2002-2011
• Labor Force Survey
• Household composition, labor status, children
• Rotating panel, at most 6 quarters data about
  one household
• T-STAR Geographical data
• Nursery and kindergarten availability, family
  daycare (2008-2010), commuting
• Matched to LFS using settlement codes
• Wage and Employment Survey
• Expected wage according to education, industry,
  etc.

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Childcare scarcity in Hungary
Utilization rate enrolled children / available
places
Kindergarten 69 Nursery 99
Scarcity
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Methodology what happens at age 3?

• Increase in availability between nursery and
  kindergarten ? effect on LS?
• Kindergarten should accept all children above 3
  if open places left
• Largest enrollment wave in September
• Continuous enrollment if unfilled places
• typically in lower quality kindergartens
• often wait until next September, when kids leave
  for school
• Problem other effects at age 3
• Maternity leave ends
• Willingness to separate from child?

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Factors affecting childcare usage and mothers
labor market participation when child turns 3
Childcare availability
Willingness to separate (Blaskó) This factor is present and has a strong effect Its timing is uncertain Continuous variable
Maternity leave High-sum maternity support ends at age 2, no work allowed Low-sum maternity support ( 100 EUR) ends at age 3 Mothers are allowed to work and receive low-sum support
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Facts and Figures I.
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Facts and Figures II.
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Facts and Figures III.
Dont want N.l. b/c childcare problem
Dont want N.l. b/c NO childcare problem
Work
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Facts and Figures IV.
Available
Working
Not looking b/c of child
Not looking, but want
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Ideal experiment and problems

• Population of women who want a child
  (unobservable)
• Assign children to them randomly (no sample
  selection)
• Randomly offer them (group 1) or not (group 2)
  childcare (childcare availability is exogenous)
• ? Compare the activity rate of group 1 2
• Problems in real life data
• Selection into motherhood
• Endogeneity of childcare availability
• Concurrent treatment end of maternity leave
• Usually tackled by parametric, multi-equation
  models
• Selection into motherhood is usually not handled
  by these
• ? We plan to take an approach that requires less
  behavioral assumptions but handles these problems

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Quasi-experiment regression discontinuity design

• Random assignment would solve selection problem
• Can think of mothers of children aged 2.7-3.3 as
  very similar, except
• Under 3 only nursery, low childcare availability
  (7 on average)
• Over 3 kindergarten, high availability (83 on
  average)
• In this discontinuity sample, assignment is
  random
• Child age not correlated to characteristics that
  determine participation
• Except willingness to outsource daycare

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Strategy 1

•  

Kr regional kindergarten availability available
kg places / number of children (or of
chilod-bearing age women) Nr regional nursery
school availability Gamma i other parameters
that affect availability
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Local Average Treatment Effect

Observed
Activity rate
LATE
Unobserved
Age of youngest child
3
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Preliminary results activity rate by level of
change in childcare availability

• Availability number of places / number of
  children in population of given age
• Change in availability if No nursery, but
  kindergarten available OR availability of
  kindergarten is higher

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Strategy 2

• Exploit gap between when child turns 3 (end of
  maternity leave) and kindergarten enrollment
  month (mostly in September)?

Maternity leave Enrollm. 0 1 Total 0 3,134 55
,468 58,602 1 59,266 0 59,266 Total 62,400 5
5,468 117,868
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Preliminary results activity by regular or late
enrollment

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Strategy 3

• Available places in 2010
• in nurseries 26.000
• in family daycare 4.000
• appr. 15 increase in available places since
  2007, with geographical differences
• Source of variation
• geographical and time differences of childcare
  availability
• regional differences in availability growth

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Issues/questions

• Develop model and RD design what is treatment?
• ? Exogenous change in change in availability
  (Ex retirement of kindergarten teacher leads to
  closing)
• ? Reduced form we observe childcare
  availability and labor market participation, but
  do not observe actual enrollment for given
  mothers
• Female labor supply or household decision model?
• ? literature shows decisions made jointly
  when young children present (Lundberg 1988)
• Fertility decision not modeled
• Include family members informal childcare
• Childcare availability or affordability?
• Availability at location living or working?
• ? use Kertesi et al. composed small regions
  based on commuting data
• Availability of flexible jobs?

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Any comments are welcome!

• Thank you for your attention,