Early child care and maternal employment : empirical evidence from Germany

This paper examines the effect of an expansion of subsidized early child care on maternal labor market outcomes. It contributes to the literature by analyzing, apart from the employment rate and agreed working hours, preferred working hours. Using the legal claim for subsidized child care introduced in Germany in August 2013 for children aged one to three years, I apply a semi-parametric difference-in-differences estimator to examine maternal labor market outcomes. Findings based on survey data from the German Micro Census show a positive effect on the employment rate, as well as on agreed and preferred working hours in districts where the child care coverage rate increases intensely in contrast to districts with a lower expansion of subsidized child care. As agreed and preferred working hours adjust in line with each other, expansion of early child care can tap labour market potentials beyond those of currently underemployed mothers.