To Work or Not to Work? The Effect of Childcare Subsidies on the Labour Supply of Parents

Tuomas Kosonen

The B.E. Journal of Economic Analysis & Policy, 2014, vol. 14, issue 3, 817-848

Abstract: This paper studies the effect of childcare subsidies on parental labour supply. I use variation arising from changes in the municipality-specific supplement to Finnish child homecare allowance to identify the causal effect of subsidies on the labour force participation of parents. The variation in labour supply incentives is plausibly exogenous, since eligibility depends on municipal-level rules, but not on family income. Robustness checks indicate that the results are not driven by policy endogeneity or residential sorting. I find a robust result that 100 euros higher supplement per month reduces the maternal labour supply by 3 percentage points.

Keywords: parental labour supply; childcare subsidies; participation elasticity (search for similar items in EconPapers)
JEL-codes: H22 J13 J22 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (25)

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Related works:
Working Paper: To Work or not to Work? The Effect of Child-Care Subsidies on the Labour Supply of Parents (2013)
Working Paper: To work or not to work? The effct of child-care subsidies on the labour supply of parents (2011)
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DOI: 10.1515/bejeap-2013-0073

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