Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/223713 
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 13271
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
How parents respond to changes in the price of childcare is an important, though not fully understood, public policy question. Our paper provides new comprehensive evidence on how a home care subsidy jointly affects maternal labour market outcomes, childcare choices, and children's development. We examine a German reform from 2013 which introduced a home care subsidy of initially 100 Euros per month for families who do not use subsidised childcare. Exploiting a date-of-birth cut-off in eligibility and using administrative data on employment and child development alongside survey data on childcare usage, we show that the reform reduced mothers' likelihood to return to work within three years by only 1.4 percentage points, but decreased childcare enrolment for one- and two-year olds by 5 percentage points. We find no effect on children's skill development at age six. Our findings imply that the subsidy accrued almost completely as windfall gains to families who would not have used formal childcare anyway.
Subjects: 
childcare choices
maternal labour supply
cash-for-care
home care subsidy
children's development
windfalls gains
JEL: 
J13
J18
J22
Document Type: 
Working Paper

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