Work and Non-Work Related Child Care Costs and UK Mothers' Employment Rates

Based on information from the 1991/92 General Household Survey, we examine the effect of work and non-work related child care costs on UK mother's employment rates. We find that subsidising work-related child care costs increases mothers' probability of labour force participation. However, we find also that subsidising non-work related child care costs, which are incurred by mothers irrespective of their working status, creates a significant disincentive effect for mothers to seek employment. This disincentive effect, which has been generally ignored in previous theoretical and empirical studies, puts in doubt the effectiveness of universal child care subsidies in increasing mothers' labour force participation rates.