Price of High‐quality Daycare and Female Employment

Marianne Simonsen

Scandinavian Journal of Economics, 2010, vol. 112, issue 3, 570-594

Abstract: Using local variation between municipalities, I analyze the degree to which the price of high‐quality publicly subsidized childcare affects female employment following maternity leave. Importantly, prices are income dependent and thus likely endogenous, yet by exploiting information on minimum income compensation during non‐employment, I bypass this problem. The results show that the price negatively affects employment. A price increase of €1 per month decreases employment by 0.08%, which corresponds to a price elasticity of −0.17. These effects prevail during the first 12 months after childbirth. I also find that availability of childcare increases employment.

Date: 2010
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