Abstract
How does the mother’s labour supply affect the household’s demand for childcare? And thus are formal and informal childcare substitutable? In this paper, we address these two questions using micro-data for 14 European countries observed over the period between 2010 and 2017. Relying on a Control Function Approach to account for the endogeneity between childcare and the mothers’ labour supply, we identify different factors affecting the demand for formal and informal childcare. The results show that the mother’s labour supply is a key element in understanding the demand for childcare and suggest that the more the mother participates in the labour market, the higher the household’s demand for childcare services. Moreover, our results support the substitutability hypothesis between formal and informal childcare. Policymakers aiming to promote mothers’ employment should increase the availability of formal childcare services, as this will increase labour supply by mothers and reduce the use of informal care arrangements.
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Notes
Interestingly, educated parents are more likely to use institutionalized types of care which offer a school-like setting (Kim & Fram, 2009; Coley et al., 2014; Carlin et al., 2019). This may be "a product of cultural norms about socialization, cognitive stimulation, and the importance of preparing even very young children for later academic success" (Johansen et al., 1996). This might also be linked to income or potential wages on the labour market that allow educated women and in general educated parents to pay for this type of care.
In their paper (Connelly & Kimmel, 2003) use an ordered probit model to study the importance of child care costs on the choice among three employment states and a multinominal logit estimation strategy to investigate the role that child care expenditures have on the type of child care chosen.
Empirical results are mixed. Some studies suggest that the availability of formal childcare services near the household increases the probability of women’s labour force participation (Del Boca et al., 2005; Du & Dong, 2013), and formal childcare costs usually negatively affect the labour force participation of mothers of young children (Blau & Hagy, 1998; Wrohlich, 2004; Du & Dong, 2013).
The countries are Austria (AT), Belgium (BE), Bulgaria (BU), Czech Republic (CZ), Greece (EL), Spain (ES), Finland (FI), France (FR), Hungary (HU), Italy (IT), Poland (PL), Romania (RO), Sweden (SE) and United Kingdom (UK).
According to EU-SILC definition, these kinds of care are often delivered within the social welfare system, especially for children under 3, but it should be noted that the way childcare facilities are founded varies a lot across countries. In some countries, such as in the UK, the childcare system relies a lot on the private sector. In other countries, like in the Nordic countries or in France, public childcare facilities are more common. Some subsidies can also be available for parents, especially for those belonging to vulnerable groups such as single parents or low income-households.
This classification uses the definition by the OECD about formal and informal care.
Overdispersion is the case where the variance is higher than the mean.
One aspect of our data is that they are nested by nature, i.e. mothers are nested in European regions that are nested in countries. This multi-level dimension can be interesting to account for in our empirical strategy. However, it has been shown that in the case of negative binomial approach, the multilevel specification that accounts for the clustering of units at higher levels does not influence much the estimated fixed effects (Tseloni, 1999). Furthermore, in our case, a multi-level approach is hardly feasible given the nature of the explained variable (count data), its Negative Binomial distribution, combined with the issue of reverse causality
The parameter of the observed residuals simultaneously produce a heteroskedasticity robust endogeneity test for \(x_i\). See Wooldridge (2015) for further discussions on the CFA.
One could also see the level of enrollment as an indicator of access to formal care. In this case, the effect would be positive. Our first-stage results shows that the congestion is more important.
The variable mother’s hours of labour supply is not dominated by zero to motivate a zero inflated model though.
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The authors would like to thank Angela Greulich, Bertrand Koebel and Holger Stichnoth for their valuable comments. This work was supported by the French National Research Agency Grant ANR-17-EURE-0020, and by the Excellence Initiative of Aix-Marseille University - A*MIDEX. The authors declare that there are no conflicts of interest related to this research.
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Thil, L., Lawson, L.A. & Lefebvre, M. An Empirical Assessment of the Drivers of Formal and Informal Childcare Demand in European Countries. Soc Indic Res 170, 581–608 (2023). https://doi.org/10.1007/s11205-023-03198-3
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DOI: https://doi.org/10.1007/s11205-023-03198-3