Labour Supply and Childcare for British Mothers in Two-Parent Families: A Structural Approach

Abstract

We develop and estimate a structural model of labour supply for British two parent families, taking explicit account of the importance of childcare related variables. We find working mothers do not increase their working hours when hourly wages increase, indeed, they are more likely to reduce their hours. The major inducement for working mothers to increase their working hours, that we find, is the provision of high quality formal childcare. Implying that government policy aiming at increasing working hours amongst British mothers of pre-school children may need to focus on the quality as well as the quantity of formal child care that is available.