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Parental Leave, (In)formal Childcare and Long-term Child Outcomes

Natalia Danzer, Martin Halla, Nicole Schneeweis and Martina Zweimüller ()

VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking from Verein für Socialpolitik / German Economic Association

Abstract: There is a strong debate about who should provide care to young children. Governments offer two alternative types of institutions: formal childcare and parental leave. We assess the effectiveness of these two competing institutions in promoting child development by comparing how a major parental leave extension from one to two years affected Austrian children's long-term outcomes in communities with and without formal childcare facilities for under-3-year-olds. Empirical identification of treatment effects is based on a sharp birthday cutoff-based discontinuity in the eligibility for extended parental leave and geographical variation in formal childcare. We find evidence that the counterfactual mode of care is decisive. If formal childcare is available, the reform induced a replacement of formal childcare by maternal care and had zero (or negative effects) on child outcomes. Whereas if formal childcare is not available, informal childcare was replaced by maternal care, and the reform improved child outcomes. This heterogeneity is driven by the additional time with the mother in the second year of the child's life and not by a change in maternal income. We conclude that care provided by mothers or formal institutions is superior to informal care-arrangements.

Keywords: Parental leave; formal childcare; informal childcare; child development; maternal labor supply; fertility (search for similar items in EconPapers)
JEL-codes: H52 I38 J12 J13 J22 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-dem, nep-eur and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Parental Leave, (In)formal Childcare, and Long-Term Child Outcomes (2022) Downloads
Working Paper: Parental Leave, (In)formal Childcare and Long-term Child Outcomes (2017) Downloads
Working Paper: Parental Leave, (In)formal Childcare and Long-term Child Outcomes (2017) Downloads
Working Paper: Parental Leave, (In)formal Childcare and Long-term Child Outcomes (2017) Downloads
Working Paper: Parental Leave, (In)formal Childcare and Long-term Child Outcomes (2017) Downloads
Working Paper: Parental Leave, (In)formal Childcare and Long-term Child Outcomes (2017) Downloads
Working Paper: Parental Leave, (In)formal Childcare and Long-term Child Outcomes (2017) Downloads
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