Money for Nothing? Universal Child Care and Maternal Employment

Published in

Journal of Public Economics 95 (11-12), pages 1455-1465, 2011.


The strong correlation between child care and maternal employment rates has led previous research to conclude that affordable and readily available child care is a driving force both of cross-country differences in maternal employment and of its rapid growth over the last decades. We analyze a staged expansion of subsidized child care in Norway. Our precise and robust difference-in-differences estimates reveal that there is little, if any, causal effect of subsidized child care on maternal employment, despite a strong correlation. Instead of increasing mothers' labor supply, the new subsidized child care mostly crowds out informal child care arrangements, suggesting a significant net cost of the child care subsidies.

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By Tarjei Havnes and Magne Mogstad
Published Feb. 22, 2012 3:35 PM - Last modified Feb. 22, 2012 3:39 PM