Child Care Provision and Women's Careers in Firms

We investigate the impact of government-provided child care on women's careers. Using a unique employer-employee matched data set from Germany, we find that mothers in low child care counties experience a 25% larger earnings penalty than mothers in high child care counties. This penalty is observable immediately after women give birth to their first child, and it comes from three margins: fewer days worked (32%), switching to a part-time position (11%), and mothers leaving the workforce (26%). We exploit a public child care reform in Germany to establish causality