the impact of part-time vs. full-time childcare on mothers ... · the impact of part-time vs....

The impact of part-time vs. full-time childcare onmothers’ labour supply: Evidence from England

Sarah Cattan 1 Mike Brewer 2 Claire Crawford 3 Birgitta Rabe 4

1Institute for Fiscal Studies (IFS)

2University of Essex and IFS

3University of Warwick and IFS

4University of Essex

Colchester, 10 Sept 2015

Rabe (Univ of Essex) Childcare and Mothers’ Labour Supply Colchester, 10 Sept 2015 1 / 20

Motivation

The UK, the US and many other OECD countries have put in placeuniversal childcare subsidies for pre-school children over the past 20years

Policies aim at promoting child development, facilitating the labourforce participation of mothers with young children, or a combinationof both

Potentially powerful instrument for increasing maternal employment,supporting economic development by maintaining a skilled workforce& reducing gender inequality

Large empirical literature estimates the link between the availabilityand price of formal childcare and maternal labour supply, exploiting

roll-out of policies over time across geographical areasdate-of-birth discontinuities in the rules determining eligibility


Motivation II

Previous studies have estimated the effect of free PT or free FTchildcare on maternal labour supply, but not the impact of anexpansion of public childcare at the intensive margin.

Several countries have extended their offer from part-day to full-dayor are planning to (e.g. Germany, Chile, UK), assessing the effects isrelevant.

Comparing the impact of expanding free childcare on the extensiveand intensive margin can help explain modest effects of PT policies

crowd-out of informal or privately paid arrangementssubsidy is too small (and/or too inflexible) to accommodate holdingeven part-time jobs

Need to compare the effect of an extension of PT to FT childcare inthe same context.


Motivation III

Transition of mothers back into the labour market is (at least) atwo-stage process, where mothers first decide to enter the labourforce and then secure a job.

Little is known about the dynamics of this transition, and how itinteracts with offers of free PT and FT childcare.

Our rich survey data allows us to map this transition by comparingeffects on different outcomes: LFP, working, PT/FT employment, etc.

Contrary to previous papers can follow mothers’ labour marketoutcomes over the 3rd and 4th year of the child’s life.


Mother’s labour market participation in England

All Lone Lowmothers education

LFP In work LFP In work LFP In workAge 2 0.59 0.56 0.45 0.38 0.47 0.42Age 3 0.62 0.58 0.51 0.44 0.51 0.45Age 4 0.65 0.60 0.55 0.46 0.56 0.50Notes: Labour Force Survey, 2000-2013.


This paper

England: ITT effect of providing free, PT childcare to three year oldsand the impact of extending provision to FT when the child turns four(and enters free, FT education)

Examine these policies in roughly the same time-period, using thesame data and empirical methodology

Exploit discontinuities that arise from date-of-birth cut-offs inentitlement while controlling for time-invariant differences betweenmothers

Provide the first evaluation of two major policies in England onmaternal labour supply

→ A youngest child becoming eligible for PT care increases mothers’ LFPby 2.6 ppts.→Eligibility for FT care raises LFP further, with 7.9 ppt more mothers inthe labour force in the 3rd term after eligibility, and 5.9 ppt more mothersworking.


Institutional background

Academic year in England runs September to August, split into 3terms

Most children start FT school in the September after they turn four(30-35 hrs/wk, 38 wks/yr)

Two children born only one day apart on 31 August and 1 Septemberwill be eligible to start school one year apart.

Starting from the term after they turn 3, children are entitled tofreePT childcare (15 hrs/wk, 38 wks/yr)

Two children born either side of 1 Sept, 1 Jan, 1 April cut-off areentitled to a free part-time nursery place one term (several months)apart

Exploit 1 September discontinuity for PT and FT childcare


September discontinuities


First stage: childcare use, term time

Use Hours/wk Spend, £/wkImpact of the 1st term of eligibility to free childcareSubsidisable care 0.068** 2.769*** -13.360***N 11,235Additional impact of being entitled to schoolSubsidisable care 0.103*** 4.969*** -7.289***N 13,120Notes: * p < .10, ** p < .05, *** p < .01. Family ResourcesSurvey 2006-2013. Separate linear regressions comparing sum-mer borns to autumn borns, various controls, LEA fixed effects.


Empirical approach

Estimate the ITT effect of becoming eligible to free part-time and full-timechildcare on mothers’ labour market outcomes in a (sort of) DiDiDframework:

Yi ,t = αi + γElig3i ,t + πElig4i ,t +

j∑k=1

µkAgeki ,t + Xi ,tπ

+ δy(t) + ρm(t) + Post3t + Post4t + εi ,t .

Where:

Yi ,t is the labour market outcome of i in period t

Elig3i ,t , Elig4i ,t is eligibility for free PT (FT) childcare at age 3 (4),determined by dob.∑j

k=1 µAgeki ,t is a polynomial fct of the child’s age

Xi ,t are child and mother controls

αi , δy(t), ρm(t) are mother, year and month fixed effects

Post3t , Post4t control for observations after 1 September to allowmothers’ outcomes to shift in SeptemberRabe (Univ of Essex) Childcare and Mothers’ Labour Supply Colchester, 10 Sept 2015 10 / 20

Empirical approach II

The coefficient on Elig3i ,t (γ) estimates impact of summer borns’ eligibilityfor PT childcare on mothers’ outcomes in autumn term (Sep-Dec).We break down the age 4 FT childcare effect into 3 separate term effects:

Elig4i ,t = T1Elig4i ,t + T2Elig4i ,t + T3Elig4i ,t

where T1 is the autumn term, T2 the spring term, T3 the summer term.

Key identifying assumption: mothers of children born each side of the 31August cut-off do not differ in unobservable ways that are correlated withlabour market outcomes.

use mother FE to eliminate time-invariant differences

balancing test of observable characteristics

robustness of results to varying size of window of children’s dob

placebo tests with hypothetical discontinuities varying between 75days before and after the true discontinuity


Data

UK Labour Force Survey, 2000-2013: quarterly, representative surveyof employment issues

Rich outcome measures: labour force participation, working,self-employment, part/full time, hours worked, looking for work

Each hh interviewed up to 5 consecutive quarters - allows us toestimate mother FE

Use full date of birth of children to determine eligibility for part-timeor full-time childcare

Use sample of mothers of children aged between 1 and 5 and bornwithin 45 days before or after the 1 September cut-off

→ Examine the labour market outcomes of mothers as their children moveinto eligibility, where mothers of younger children serve as a control group.


Balancing

Mothers of Mothers of P-val forsummer borns autumn bornsN Mean N Mean diff

Age 4348 31.4 4610 31.65 0.05Age squared 4348 1021.95 4610 1037.71 0.05Any partner 4348 0.77 4610 0.77 0.93White 4348 0.82 4610 0.83 0.19Mixed 4348 0.01 4610 0.01 0.78Asian 4348 0.09 4610 0.08 0.27Black 4348 0.04 4610 0.04 0.34Chinese 4348 0.01 4610 0.01 0.62No qualification 4302 0.12 4557 0.11 0.13Other qualification 4302 0.13 4557 0.14 0.41GCSE 4302 0.29 4557 0.28 0.29A-levels 4302 0.17 4557 0.18 0.26Higher education 4302 0.07 4557 0.07 0.8Degree or equivalent 4302 0.21 4557 0.22 0.28No. Children aged 0-2 4348 0.51 4610 0.49 0.09No. children aged 3-4 4348 0.79 4610 0.78 0.29No. children aged 5-9 4348 0.43 4610 0.43 0.53No. children aged 10-14 4348 0.18 4610 0.2 0.12No. children aged 0-19 4348 1.94 4610 1.93 0.90


Results - all mothers

Table: Effect of child’s eligibility to free childcare on mothers’ labour marketoutcomes

In labour In work Self- Part-time Full-timeforce employed work work

1st term PT elig. 0.009 -0.001 0.003 0.000 0.0011st term FT elig. 0.011 0.007 0.006 -0.003 0.0112nd term FT elig. 0.035*** 0.022* 0.003 0.006 0.018*3rd term FT elig. 0.042*** 0.039*** -0.001 0.023 0.017

No. observations 64,743 64,743 64,743 64,230 64,230No. mothers 21,813 21,813 21,813 21,745 21,745Notes: * p < .10, ** p < .05, *** p < .01. Labour Force Survey 2000-2013. 45 day bandwidth, standarderrors clustered at LEA level.


Results - mothers whose youngest is eligible

Table: Effect of the youngest child’s eligibility to free childcare on mothers’labour market outcomes

In labour In work Self- Part-time Full-timeforce employed work work

Impact relative to no eligibility:1st term PT eligibility 0.026** 0.012 0.011** 0.015 -0.0011st term FT eligibility 0.037** 0.017 0.012 0.022 0.0032nd term FT eligibility 0.072*** 0.046** 0.009 0.045* 0.0083rd term FT eligibility 0.079*** 0.059** 0.01 0.051* 0.014

Impact relative to PT:1st term FT - 1st term PT 0.011 0.005 0.001 0.007 0.0042nd term FT - 1st term FT 0.046** 0.034** -0.002 0.029 0.0093rd term FT - 2nd term FT 0.053** 0.048*** -0.001 0.036* 0.016

Number of observations 49,057 49,057 49,057 48,667 48,667Number of mothers 17,907 17,907 17,907 17,846 17,846

Notes: * p < .10, ** p < .05, *** p < .01. Labour Force Survey 2000-2013. 45 day bandwidth, standard errorsclustered at LEA level.


Results - subgroups

Table: Heterogeneity of impact on labour force participation

family size partnership status education1st term PT elig. 0.004 1st term PT elig. 0.027 1st term PT elig. 0.013* 1-2 children 0.018 * Mother partnered -0.012 * Mother low edu 0.008

1st term FT elig. 0.031 1st term FT elig. 0.037 1st term FT elig. 0.033** 1-2 children 0.003 * Mother partnered -0.006 * Mother low edu -0.003

2nd term FT elig. 0.021 2nd term FT elig. 0.061** 2nd term FT elig. 0.074**** 1-2 children 0.061* * Mother partnered 0.008 * Mother low edu -0.015

3rd term FT elig. 0.025 3rd term FT elig. 0.070** 3rd term FT elig. 0.076**** 1-2 children 0.064* * Mother partnered 0.004 *Mother low edu -0.004

N observations 49,057 N observations 49,057 N observations 48,549N mothers 17,907 N mothers 17,907 N mothers 17,804

Notes: * p < .10, ** p < .05, *** p < .01. Labour Force Survey 2000-2013. 45 day bandwidth, standard errorsclustered at LEA level.


Robustness checks

Table: Sensitivity of results to choice of bandwidth

30 day bandwidth 60 day bandwidth 90 day bandwidthLFP Work LFP Work LFP Work

1st term PT elig. 0.044*** 0.032** 0.026** 0.014 0.011 0.0041st term FT elig. 0.065*** 0.039* 0.032** 0.012 0.028** 0.0112nd term FT elig. 0.104*** 0.066*** 0.067*** 0.045** 0.049*** 0.030**3rd term FT elig. 0.122*** 0.082*** 0.074*** 0.059*** 0.059*** 0.041**

No. observations 32,789 32,789 64,807 64,807 96,637 96,637No. mothers 11,982 11,982 23,633 23,633 35,372 35,372

Notes: * p < .10, ** p < .05, *** p < .01. Labour Force Survey 2000-2013. Various bandwidths, standard errorsclustered at LEA level.

We also check sensitivity of results to the function of child’s age (notshown)


Placebo analysis

a. Labour force participation b. Being in work


Conclusions

FT childcare impacts mothers’ labour market outcomes more than PTchildcare.

Transition into work is quickest through entering self-employment.

After a period of job search mothers with children eligible for FT careenter PT work.

Suggests that PT childcare is too small/inflexible to accommodateeven PT work.

Cannot expect immediate increases in rate of mothers working whenchildren become eligible for free childcare.


Thank [email protected]


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