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Parental Labour Supply Responses to the Abolition of Day Care Fees

Mathias Huebener (), Astrid Pape () and C. Katharina Spieß ()
Additional contact information
Astrid Pape: Freie Universität Berlin
C. Katharina Spieß: Bundesinstitut für Bevölkerungsforschung (BiB)

No 12780, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper provides evidence that low private contributions to highly subsidised day care constrain mothers from working longer hours. We study the effects of a reform that abolished day care fees in Germany on parental labour supply. The reform removed private contributions to highly subsidised day care in the year before children enter primary school. We exploit the staggered reform across states with a difference-in-differences approach and event studies. Although participation in day care is almost universal for preschoolers, we provide evidence that the reform increases the intensity of day care use and the working time of mothers by about 7.1 percent. Single mothers, mothers with no younger children, mothers in denser local labour markets, and highly educated mothers react strongest. We find no evidence for labour supply responses at the extensive margin, and no evidence of responses in paternal labour supply. The effects on maternal labour supply fade-away by the end of primary school as mothers in the control group also gradually increase their labour supply as their children grow older.

Keywords: difference-in-differences; child care costs; labour supply; event study (search for similar items in EconPapers)
JEL-codes: J13 J22 J38 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2019-11
New Economics Papers: this item is included in nep-dem, nep-eur and nep-lma
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Citations: View citations in EconPapers (6) Track citations by RSS feed

Published - published in: Journal of Economic Behavior and Organization, 2020, 180, 510-543

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Journal Article: Parental labour supply responses to the abolition of day care fees (2020) Downloads
Journal Article: Parental labour supply responses to the abolition of day care fees (2020) Downloads
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