Do comprehensive and diverse childcare services affect women’s labour supply and well-being?

ABSTRACT

This paper estimates the effect of comprehensive and diverse regional childcare services on Japanese women’s labour participation and well-being. On the basis of a sequence of childcare policies introduced in the early 2000s in Japan, we apply the difference-in-differences method. Our empirical results show that these services had positive heterogeneous effects on women’s labour supply in terms of extensive and intensive margins, depending on their employment type. Furthermore, we find a mixed result that the availability of such childcare services deteriorated the subjective well-being of regular employees possibly due to the increased working hours, but improved that of nonregular employees possibly due to the increased participation in the labour market.

KEYWORDS:

• Quality/variety of childcare services
• women’s employment
• women’s health condition
• difference-in-differences

JEL CLASSIFICATION:

• J13
• J18

Acknowledgments

We thank Charlotte Bartels, Daniele Checchi, Dean Lillard, Collin McKenzie, and Patricia McManus for helpful discussions and comments at JHPS and JHPS-CNEF Data Users Conference. We are also thankful for feedback from Yoshio Higuchi. Note that any errors in this paper are attributable solely to us.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ In Japanese case, for example, among those who have children less than 6 years old, the average time of childcare per day is 3 hours and 45 minutes for women while 49 minutes for men (Survey on Time Use and Leisure Activities, 2016).

² See Baker, Gruber, and Milligan (2008), Black et al. (2014), Fitzpatrick (2010), and Lefebvre and Merrigan (2008) as examples.:

³ For example, Kornstad and Thoresen (2007) consider a discrete choice model for labour supply and use of childcare, where mothers take into account a number of pecuniary and nonpecuniary attributes of jobs and childcare, such as working hours, wage rates, and type of work for jobs, and quality of staff, opening hours, and childcare fees.

⁴ The total numbers of local governments in Japan were 3100 on 1 April 2004.

⁵ The mean age of mothers giving birth to their first child in Japan was 28.3 in 2004 (Resource: Vital Statistics). Note also that the spouses of the survey respondents are also included in our analysis to secure the sample size. Respondents who moved between model and nonmodel regions are excluded from our analysis to prevent an endogeneity problem caused by these movements.

⁶ One possible endogeneity problem in this context is that model regions made active and diverse plans for childcare policies based on the locals’ strong motivation to work. The DD analysis mitigates this problem by removing unobservable and time-invariant effects from the samples. Another possible problem arises when other childcare policies, especially expanding childcare capacity, are different between model and nonmodel regions. In this regard, we checked the trend of coverage rate (total quotas of childcare centres divided by the number of populations under 6) for both regions using municipality-level data. Specifically, we confirmed that a simple regression of coverage rate on interaction of treatment dummy with years, including years’ and municipalities’ fixed effects, shows no statistical significance, and that the DD estimates would be less likely to be confounded by effects of childcare capacity.

⁷ A nonregular employee is a worker with a fixed-term contract, including part-time/temporary/short-time/dispatched workers, etc. To assess health condition, JHPS/KHPS asks respondents to rate their subjective health condition on a scale from 1 (very good) to 5 (very bad). We create a Subjective Good Health dummy that takes a value of 1 if the respondent answers the questions with a value of either 1 or 2.

⁸ In deriving propensity scores, we use Epanechnikov as a kernel function with a bandwidth of 0.06. Note that for the DD estimation, we use a common support condition.

⁹ To check the parallel trends assumption for DD analysis, we regressed each outcome on interaction of treatment dummy with years, including years’ and individual fixed effects, and found no statistical significance in pre-treatment period. For a further assessment of the parallel trends assumption, we performed a placebo test, where women who was in 50s and 60s in model regions were regarded as a fake treatment group. This placebo test shows no significant result in each employment rates, indicating less possibility that trends of women’s labour supply were different between model and nonmodel regions.

Additional information

Funding

This research was supported by Grand-in-Aid for Scientific Research from the Ministry of Education, Culture, Sports, Science and Technology, Japan [No. 18K01659 and No. 17H06086]. The micro data of the ‘Keio Household Panel Survey’ were provided by the Panel Data Research Center at Keio University.