Can Child Care Vouchers Get Turkish Mothers Back to Work? Estimating the Employment and Redistributionary Impact of a Demand Side Child Care Subsidy in Turkey

Development Analytics Research Paper Series No. 1401

27 Pages Posted: 6 Dec 2014

See all articles by Meltem A. Aran

Meltem A. Aran

Development Analytics

Herwig Immervoll

World Bank, Europe and Central Asia; Organization for Economic Co-Operation and Development (OECD) - Social Policy Division; IZA Institute of Labor Economics; ISER Institute for Social and Economic Research; University of Canberra - National Centre for Social and Economic Modelling (NATSEM); United Nations - European Centre for Social Welfare Policy and Research

Cristobal Ridao-Cano

World Bank - Development Research Group (DECRG)

Date Written: October 1, 2014

Abstract

Lack of access to affordable and quality child care is one of the impediments to increasing female labor force participation rates in Turkey. With less than one third of working age women active in the labor market, the Turkish government has been considering options for expanding female labor force participation by providing a demand side subsidy conditional on employment (or activation). To achieve this, utilization of child care is being considered as a policy option. This paper considers the labor supply impact and cost effectiveness of such a demand side subsidy by evaluating the labor supply model of women in Turkey under the current conditions and simulates -- under various targeting scenarios and for different benefit levels of the subsidy -- (i) the number of women that would join the labor force or become formally employed; (ii) the budgetary implications and cost effectiveness of the subsidy; and (iii) the potential benefits accrued by the bottom quintiles of society. Given the constrained supply of existing services, the paper finds that the immediate employment impact of such a demand side intervention is likely to be low, and the distribution regressive in the short term. A targeted subsidy based on welfare level and employability of the woman is likely to be most cost effective in the medium term when supply side constraints on child care are addressed and concurrent policies to expand the supply of child care have been implemented. In the short term, when the subsidy is provided conditional on child care utilization (and there is no targeting of the poor) the benefits are likely to be highly regressive, with only 3 percent of benefits accruing to the bottom quintile of the population. The formal employment impact of the program is also estimated to be low: we find that in the short term the number of women activated through the program would range from 2,800 to 43,000 women (entering formal employment) at a cost varying from 1.4 million TL to 37 million TL per month (not including administrative costs of running the program) if the benefits are fixed at 50 % of the net minimum wage. In the medium term, when the supply of ECEC is assumed to be more flexible and supply of services is not a constraint, the demand side transfer is expected to activate into the formal sector an upper bound estimate of 187,600 women, constituting a less than 1 percentage point change in female labor force participation -- at a cost of about 138 million TL per month.

Keywords: Early childhood education and care, preschool, child care, female labor force participation, demand side subsidy, voucher, gender, Turkey

JEL Classification: J13, J16, H22, H23, H75

Suggested Citation

Aran, Meltem A. and Immervoll, Herwig and Ridao-Cano, Cristobal, Can Child Care Vouchers Get Turkish Mothers Back to Work? Estimating the Employment and Redistributionary Impact of a Demand Side Child Care Subsidy in Turkey (October 1, 2014). Development Analytics Research Paper Series No. 1401. Available at SSRN: https://ssrn.com/abstract=2533946 or http://dx.doi.org/10.2139/ssrn.2533946

Meltem A. Aran (Contact Author)

Development Analytics ( email )

31 Mektep Sokak
Emirgan
Istanbul, Istanbul 34467
Turkey
902122778641 (Phone)

HOME PAGE: http://www.developmentanalytics.org

Herwig Immervoll

World Bank, Europe and Central Asia ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Organization for Economic Co-Operation and Development (OECD) - Social Policy Division ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France
(33 1) 45 24 92 14 (Phone)
(33 1) 44 30 61 78 (Fax)

HOME PAGE: http://www.oecd.org/els/social

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/profile?key=1935

ISER Institute for Social and Economic Research ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

HOME PAGE: http://www.iser.essex.ac.uk/people/research-associates

University of Canberra - National Centre for Social and Economic Modelling (NATSEM) ( email )

Canberra, ACT 2601
AUSTRALIA

HOME PAGE: http://www.canberra.edu.au/centres/natsem/people/associates/herwig-immervoll

United Nations - European Centre for Social Welfare Policy and Research ( email )

Berggasse 17
Vienna, A1010
Austria

HOME PAGE: http://www.euro.centre.org

Cristobal Ridao-Cano

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
249
Abstract Views
1,362
rank
125,593
PlumX Metrics