Child care provision and maternal employment lessons from Hungary

1
Child care provision and maternal employment
lessons from Hungary

• Very preliminary results - please do not quote.
• Ágota ScharleBudapest Institute for Policy
  Analysis
• 18 September 2009, Vienna

2
Outline

• Why increase day care provision-
  fertility/employment trade-off- labour supply
  effects
• Some evidence
• How to implement policy proposal for Hungary

3
Why increase day care (1)?
4
Why increase day care (2)?
5
Why increase day care (3)?
(Mis)match of family policy and gender roles
6
Why increase day care (4)?

• Theory (standard labour supply models) and
  available evidence that
• - availability of day care increases LS
• - some cash tranfers reduce LS
• Apps and Rees (2001), Chevalier and Viitanen
  (2002), Jaumotte (2003), Pissarides (2005),
  Scharle (2007)

7
Why increase day care (5)?

• Shifting public funds from cash to day care has
  double effect
• - reducing cash transfers increase LS
• - increasing day care increase LS
• but how much?

8
Evidence an empirical study

• Focus on mothers' employment rate impact of cash
  transfers and day care
• No other effects considered
• wellbeing of children, early childhood education
• wellbeing/equal opportunities of mothers
• poverty cf Esping-Andersen (2008)?
• fertility cf Sacerdote and Feyrer (2008)?
• No prediction on evolution in time/adjustment
• No alternative policy options considered
• Based on Köllo and Scharle (2008)?

9
Effects vary by education
10
may be smaller for low educated
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Estimation strategy

• Need variation in policy mix
• Cross country panel, aggregate data
• Individual cross section with country
  characteristics
• LHS mother/non-mother employment rate by
  education
• RHS
• cash transfers, public day care as of GDP
• control variables fertility, GDP (attitudes),
  male unemployment (added worker), pay gap and
  female unemployment rate (technological change)?

12
Data

• Mother/non mother employment rates from EU LFS
• Family policy variables from Esspros
• Years between 1998 2005
• Constraints
• measureability of institutions, attitudes
• sample size and variance (Scandinavian data)?
• comparability of data (definition of employment)?
• missing variables (private supply of child care,
  costs)?
• endogeneity welfare model attitudes female
  employment, fertility welfare provisions
  female employment, education fertility
  female employment

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Estimates

• Gender participation gapi
• constant dDi µMi aXi ßYi ?Zi ?i
• Motherhood employment gapie
• constant dDi µMi aXi ßYi(e) ?Zi ?i
• NMS 22 obs, OMS 65 obs (Se - Dk, Fi, No)?
• women aged 20-44
• Individual cross section logit estimate
• 16 countries (incl Cz, Hu, Lv, Lt, Si but no
  Scandinavian)?
• mothers aged 20-49
• For three education levels primary, secondary,
  higher

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Mother/non-mother employment rate
15
Probability of mothers' employment
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Summary of results

• Cross-country panel
• Cash (-) /day care () effects as expected, not
  all significant in OMS
• also in 3 educational groups
• most controls as expected
• Individual cross section
• individual controls as expected
• effect of cash (-) and day care () as expected
  in NMS, not significant in OMS

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Policy implication

• Shifting 0.1 GDP from cash to day care
• Primary educated mothersOMS 1,9 point NMS
  12,6 point
• Secondary educated mothers OMS 1,7 point
  NMS 14,2 point
• GraduatesOMS 1,3 pointNMS 15,5 point
  increase in employment
• Effect of cash transfer lt day care

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A policy proposal for Hungary

• High spending on cash transfers
• Long paid maternity leave
• Poor provision of day care for under 3s
• Low employment rate of mothers
• Based on Blaskó et al (2009)?

19
Paid maternity leave among longest
Data for 2006-7, OECD Family database
http//www.oecd.org/dataoecd/45/26/37864482.pdf
20
Maternal employment among lowest
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Constraints of increasing day care

• Municipal responsibility
• 3000 municipalities, avg size among smallest in
  EU
• Subsidy from central gov covers lt50 of costs
• Low cap on parental contribution
• cf goal of ensuring equal access and high quality
• Political costs

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A possible solution policy redesign

• Convert cash allowance to day-care voucher for
  mothers entering employment
• Compulsory for mothers and for the municipality
• Allow higher share of parental contribution
• Additional support for low educated
• Remove some administrative hurdles
• Improve quality assurance rating system
• Link central funding to quality
• Reduce barriers for non-profit providers

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A possible solution political costs

• Shift would be almost self-financing but
• Beneficiaries not the middle class
• Attitudes towards gender roles
• Professional organisations quality,
  competition
• Mistrust in all government plans
• Mistrust in market forces (LD-LS)?
• ? stakeholder analysis, communication

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References

• Apps and Rees (2001) Fertility, female labor
  supply and public policy, IZA Discussion Paper
  409.
• Chevalier and Viitanen (2002) The causality
  between female labour force participation and the
  availability of childcare. Applied Economics
  Letters, 9(14), 915918.
• Esping-Andersen (2002) A child centred
  social investment strategy. In Esping-Andersn,
  Gallie, Hemerijck, Myles (eds) Why we need a new
  welfare state. Oxford University Press, pp 26-68
  
• Jaumotte (2003) Female labour force
  participation past trends and main determinants
  in OECD countries. Economics Department Working
  Papers, No. 376, OECD.
• Pissarides, Garibaldi, Olivetti, Petrongolo, and
  Wasmer (2005) Women in the labour force how
  well is Europe doing?, in Tito Boeri, Daniela
  del Boca and Christopher Pissarides (Eds) Women
  at Work An Economic Perspective, Oxford
  University Press
• Sacerdote and Feyrer (2008) Will the Stork
  Return to Europe and Japan? Understanding
  Fertility within Developed Nations NBER 14114.
• Scharle (2007) The effect of welfare provisions
  on female labour supply in Central and Eastern
  Europe, Journal of Comparative Policy Analysis
  Research and Practice, Volume 9, Issue 2, 157 -
  174 o.
• Sleebos (2003) Low Fertility Rates in OECD
  Countries Facts and Policy Responses, OECD
  DELSA/ELSA/WD/SEM(2003)15

25
Thank you.

• Köllo and Scharle (2008) Female labour supply
  and child-care provisions in Europe was funded by
  WORKCARE Social quality and the changing
  relationship between work, care and welfare in
  Europe, a Sixth Framework Programme of the
  European Commission.
• Blaskó et al (2009) Impact analysis of
  increasing day care capacities for children aged
  1-3 was funded by the Prime Minister's Office of
  Hungary
• Correspondance agota.scharle_at_budapestinstitute.e
  u