Access to universal childcare and its effect on maternal employment

Abstract

Subsidized childcare is a key instrument to support maternal employment in most OECD countries. Using a major reform implemented in Luxembourg in 2009, I study the effects of expanding access to subsidized childcare on the employment decisions of women in a context where childcare is universal and heavily subsidized, but is limited by capacity constraints. The identification strategy relies on temporal variation across age groups of children. In response to the reform, the employment rate of mothers increased by 3 percentage points, and their working time grew by 1 h per week. This effect hides the difference between children’s ages, as mothers of the youngest children are found to be more responsive to the reform than mothers of children in primary education. Studying heterogeneous effects reveals a differential impact of the reform with regard to prior employment status.