Spillover Effects of Public Childcare Expansion in Regional Labor Markets

Nils Wehrenberg

No 249, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: This paper examines labor market spillover effects of expansions in publicly subsidized child care for children under the age of three. Using German administrative data, I exploit two major reforms that generated cross-county variation in the expansion of early childcare. I implement a matched Difference-in-Differences design to identify causal effects. The results show that counties that experienced a sudden and sharp increase in early childcare cover age had a 0.55 percentage points higher employment rate than comparable control counties seven years after the expansion. Excluding mothers and childcare workers, who are directly affected by the childcare expansion, does not significantly reduce the estimated effect. This suggests the presence of labor market spillover effects beyond the directly affected groups. Additionally, the employment effect is not driven by migration, but by the existing local work force.

Keywords: early childcare; local labor markets; local labor market spillovers (search for similar items in EconPapers)
JEL-codes: J13 J21 R23 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2026-08
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Persistent link: https://EconPapers.repec.org/RePEc:bav:wpaper:249_wehrenberg.rdf

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