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Effects of Subsidized Childcare on Mothers’ Labor Supply Under a Rationing Mechanism

Shintaro Yamaguchi, Yukiko Asai and Ryo Kambayashi

No 658, Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: We estimate the marginal treatment effect of childcare use on mothers’ labor market outcomes by exploiting a staggered childcare expansion across regions in Japan. The estimates show that the treatment effect is negatively associated with propensity to use childcare, which implies that mothers who increase their labor supply more are less likely to use childcare. Negative selection into treatment arises, because the childcare rationing rule gives preferential treatment to mothers working full-time before childcare application. These mothers are strongly attached to the labor market and likely to work regardless of the availability of subsidized childcare.

Date: 2017-04
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