Childcare Subsidies and Labor Supply: Evidence from a large Dutch Reform

L.J.H. Bettendorf (l.j.h.bettendorf@cpb.nl), Egbert L.W. Jongen (e.l.w.jongen@cpb.nl) and Paul Muller
Additional contact information
L.J.H. Bettendorf: CPB Netherlands Bureau for Economic Policy Analysis
Egbert L.W. Jongen: CPB Netherlands Bureau for Economic Policy Analysis

No 12-093/I, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Over the period 2005-2009 the Dutch government increased childcare subsidies substantially, reducing the average effective parental fee by 50%, and extended subsidies to so-called guestparent care. We estimate the labour supply effect of this reform with a difference-in-differences strategy, using parents with older children as a control group. We find that the reform had a moderately sized impact on labour supply. Furthermore, the effects are an upper bound since there was also an increase in an earned income tax credit for the same treatment group over the same period. The joint reform increased the maternal employment rate by 2.3%-points (3.0%). Average hours worked by mothers increased by 1.1 hours per week (6.2%). Decomposing the hours effect we find that most of the increase in hours is due to the intensive margin response. A number of robustness checks confirm our results.

Keywords: Childcare subsidies; labour participation; hours worked; difference-in-differences (search for similar items in EconPapers)
JEL-codes: C21 H40 J13 J22 (search for similar items in EconPapers)
Date: 2012-09-13
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Childcare subsidies and labour supply — Evidence from a large Dutch reform (2015)
Working Paper: Childcare subsidies and labour supply: evidence from a large Dutch reform (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20120093

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