I have been assessing the relationship between free childcare and parental labour supply in England. Despite the existence of childcare subsidies in many developed countries, the cost of childcare is still thought to hinder parental employment. Many governments are therefore considering increasing the generosity of their childcare subsidies, but the impact of such a policy is a priori ambiguous, and little is known empirically.
The current version of our work, “Free childcare and parents’ labour supply: is more better?“, written with Sarah Cattan, Claire Crawford and Birgitta Rabe, compares the impacts on parents’ labour supply of offering free part-time childcare and of expanding this offer to the whole school day. We use an empirical strategy which, unlike previous studies, exploits both date of birth discontinuities and panel data. We find that the provision of free part-time childcare has little, if any, causal impact on the labour market outcomes of mothers or fathers. Increasing the number of hours of free childcare to cover a full school day, however, leads to significant increases in the labour supply of mothers whose youngest child is eligible, with impacts emerging immediately and increasing over the months following entitlement. I blogged about our work here, and a slightly longer summary of our findings, and their implications for policy, is here.
In general, I tend to take the view that making formal childcare for 3 and 4 year olds cheaper is not by itself going to make much difference to levels of maternal employment. In policy pieces, I have also pointed out that the complex way in which the UK government subsidises and provides early years childcare itself acts as a barrier to work for some, and that there could be big advantages to redesigning childcare support from scratch in the light of the UK’s mixed market, rather than making further incremental expansions to existing programmes. I have made these points regularly to Parliamentary enquiries and to civil servants and politicians.