Money for Nothing? Universal Child Care and Maternal Employment
Tarjei Havnes, Magne Mogstad
The strong correlation between child care and maternal employment rates has led previous research to conclude that a ordable 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 the introduction of subsidized, universally accessible child care in Norway. Our precise and robust di erence-in-di erences estimates reveal that there is little, if any, causal effect of 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 signi cant net cost of the child care subsidies.