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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

Abstract: 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)
Date: 2015
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DOI: 10.1007/s11150-013-9215-8

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