We use quasi‐experimental expansion of publicly funded childcare slots for children under the age of three from Germany and exploit regional variations of this large‐scale expansion to account for endogenous and selective fertility decisions. To account for left and right censoring, we implement this quasi‐experimental framework into the setting of the semiparametric Cox hazard model. By using spatial data on childcare provision at the level of counties and microdata from the German Socio‐Economic Panel (SOEP) from 1998 to 2012, we find a significant increase in the transition probability to first birth by 11.9% for native childless couples who were in the labor force before childbearing. With regard to transition to the second birth, however, no significant effect is found from the increase in childcare slots. With a particular focus on the transition to first birth, the effects are demonstrated not to be driven by selective residency choices and internal migration patterns. Furthermore, a large set of robustness checks is applied to show that highly educated mothers react the most, while effects are not attributable to the upper decile of income distribution.
We exploit local and temporal variation in the availability of public childcare for children under the age of three that induces exogenous variation in childcare attendance. We find a weak, positive average treatment effect (ATE) on maternal labor supply. The estimation of the average treatment effect is interesting – however, possibly masking important effect heterogeneity. Examining selection behavior and estimating marginal treatment effects along the distribution of observables and unobservables that drive individual treatment decisions reveal transmission channels and uncover substantial heterogeneity in marginal returns from public childcare reforms. By estimating marginal returns, we detect reverse selection on gains at the intensive margin, whereas a substantial share (40 percent) of mothers with median desire to public childcare react with increased probability to work full time. Thus, if the supply of public childcare is expanded from a modest to a more generous level of coverage, those with average resistance towards early public childcare do gain. At the extensive margin, positive selection on gains is found; however, only a small fraction of mothers with the lowest distaste for early public childcare shift from non-employment to part-time jobs.
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