On 28th January 2019 (1-2pm) Mathias Hübener, research associate at the DIW Berlin, will give a presentation about “Childcare costs and maternal labour supply: Evidence from a fee abolition reform” in Q3.245. Afterwards, Mr. Hübener will be available for questions and discussions. His presentation is part of: https://wiwi.uni-paderborn.de/dep1/me/research/discussing-research/seam/
Abstract: While maternal labour force participation increased substantially with the availability of affordable daycare, many mothers with small children work mostly part-time. This part-time employment is a major driver of the gender wage gap. This paper provides evidence that even low private contributions to highly subsidized childcare constrain maternal labour supply, especially in working longer hours. We study the effects of a daycare fee abolition reform in Germany on maternal labour supply. The reform removed the remaining private contributions to highly subsidized daycare in the year before children enter primary school, at different points in time across federal states. We exploit this variation with a difference-in-differences approach within an event study along children’s age. The analysis uses data from the German Micro Census, sampling one percent of all German households each year. Even though the participation in daycare is almost universal already, we provide evidence that the reform increases the use of daycare at the intensive margin, and the share of full-time working mothers by about 10 percent. Single mothers, mothers with no further young children and mothers in denser local labour markets react strongest. We find neither evidence for labour supply responses at the extensive margin, nor can we find any responses in fathers’ labour supply. The effects on mothers’ labour supply fade-out after about four years. This short-term increase in maternal labour supply alone fails to pass cost-benefit considerations.