Enticing even higher female labor supply: the impact of cheaper day care
Ines Hardoy and
Pål Schøne ()
Review of Economics of the Household, 2015, vol. 13, issue 4, 815-836
We ask whether cheaper child care can spur labor supply of mothers in an economy with high female labor supply. We exploit exogenous variation in child care prices induced by a public reform. A triple difference approach is put forward. The results show that reduced child care prices led to a rise in labor supply of mothers by approximately 5 %. A “back-of-the-envelope” calculation estimates an elasticity of approximately −0.25, which is at the lower end compared to other studies, suggesting that labor supply is less elastic when female employment is high. Since a capacity-increase was introduced at the same time, the positive labor supply effect may be a result of both reduced prices and increased capacity. Copyright Springer Science+Business Media New York 2015
Keywords: Labor supply; Family policy; Child care costs; Difference-in-differences-in-differences; J13; J18; J22 (search for similar items in EconPapers)
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