Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215176 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12780
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper provides evidence that low private contributions to highly subsidised day care constrain mothers from working longer hours. We study the effects of a reform that abolished day care fees in Germany on parental labour supply. The reform removed private contributions to highly subsidised day care in the year before children enter primary school. We exploit the staggered reform across states with a difference-in-differences approach and event studies. Although participation in day care is almost universal for preschoolers, we provide evidence that the reform increases the intensity of day care use and the working time of mothers by about 7.1 percent. Single mothers, mothers with no younger children, mothers in denser local labour markets, and highly educated mothers react strongest. We find no evidence for labour supply responses at the extensive margin, and no evidence of responses in paternal labour supply. The effects on maternal labour supply fade-away by the end of primary school as mothers in the control group also gradually increase their labour supply as their children grow older.
Subjects: 
labour supply
child care costs
difference-in-differences
event study
JEL: 
J13
J22
J38
Document Type: 
Working Paper

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