Female Employment and Childcare

55 Pages Posted: 9 Nov 2020

Abstract

Childcare and women's employment decisions are intimately linked. I develop a dynamic model designed to analyse the effects of childcare subsidies on labour supply, fertility, marriage, and childcare decisions in a collective setting. In the model, children are a household good, produced by both parental time and time in childcare. Couples cannot commit to insure one another against the lower wages and lower consumption associated with spending time with a child. I estimate the model using the Panel Study of Income Dynamics in the United States to evaluate the impact of childcare subsidy programmes on various life-cycle outcomes of women and men. Offering a 10 percent childcare subsidy expands the labour supply of single women from lower-education backgrounds by 5.4 percent while married women, and higher-educated single women, respond much less. Finally, I show that there are large increases in childcare take-up associated with childcare subsidies, which improves the quality of children as a household good. This increases gains from marriage and results in an increase in the married fraction of the sample.

Keywords: female labour supply, childcare, collective household models

JEL Classification: J24, J22, J12, J13, D13

Suggested Citation

Hassani Nezhad, Lena, Female Employment and Childcare. IZA Discussion Paper No. 13839, Available at SSRN: https://ssrn.com/abstract=3726441 or http://dx.doi.org/10.2139/ssrn.3726441

Lena Hassani Nezhad (Contact Author)

University of London ( email )

Senate House
Malet Street
London, WC1E 7HU
United Kingdom

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