Public Child Care Provision and Women's Career Choices

Abstract

This paper studies the impact of child care provision on the child penalty and on women’s career choices. We show that new mothers in high child care counties in Germany experience a 25% smaller earnings penalty than new mothers in low child care counties. This difference comes from three margins: mothers in high child care counties work more days (32%), are less likely to switch to a part-time position (11%), and less likely to leave the workforce completely (26%). Results are stronger for highly educated women. Women in high child care areas are more likely to be promoted to managerial positions and higher levels in the job ladder. There are more female managers in high child care counties and stock returns of firms in these counties react less negatively to the announcement of a mandatory board gender quota.

Keywords: Child care, Motherhood penalty, Gender pay gap

JEL Classification: J3, J7