Female employment and pre-kindergarten: on the unintended effects of an Italian reform
|Speaker:||Francesca Carta, Bank of Italy|
|Date: ||Friday 10 March 2017|
|Location: ||Matrix Lecture Theatre, Building One|
We theoretically show that when mothers need to buy childcare services not only if they work but also if they want to search actively for a job, a reduction in the price of childcare will increase their likelihood of searching but may decrease their willingness to accept a job offer and therefore lower employment. We test these predictions empirically by means of a Regression Discontinuity design and find that the introduction in Italy of pre-kindergarten, a much cheaper alternative to day care for 2-year-old children, increased both participation in the labour market and employment of mothers of eligible children. This effect was driven largely by a significant decrease in the stated reservation wage. For a full evaluation of the policy we finally provide evidence that pre-kindergarten did not affect children's cognitive development as measured at second grade.