The Effect of Childcare Access on Women's Careers and Firm Performance

Abstract

We study the effects of government-subsidized childcare on women's careers and firm outcomes using linked tax filing data. Exploiting cohort-level variation in childcare access based on a Quebec universal childcare reform, we show that earlier access to childcare not only increases new mothers' employment and earnings, but also prompts them to reallocate careers to firms previously unattractive to new mothers. These firms subsequently benefited from the reform, drawing more young, productive female workers and experiencing better performance. Our results suggest that childcare frictions hamper women's career progression and the allocation of human capital in the labor market.

Keywords: Childcare, gender gap, earnings, productivity, labor, worker-firm match

JEL Classification: G28, G32, K22