The Impact of Publicly Funded Childcare on Parental Well-Being: Evidence from Cut-Off Rules.

Abstract

As more and more countries consider expanding public childcare provision, it is important to have a comprehensive understanding of its implications for families. This article adds to the existing literature by investigating the effect of publicly funded childcare on parental subjective well-being. To establish causality, I exploit cut-off rules introduced following the implementation of a legal claim to childcare in Germany. The results suggest that childcare provision strongly increases the life satisfaction of mothers who were previously constrained by the lack of childcare supply. The effect is more pronounced for mothers with higher labour market attachment. The coefficients for fathers are smaller and not statistically significant. As potential mechanisms, a wide range of time-use and labour market outcomes are explored. This shows that mothers indeed shift time from non-market activities to formal work in response to childcare eligibility, resulting in direct and indirect pecuniary and non-pecuniary returns to maternal life satisfaction. The findings shed light on key issues of work-family reconciliation and stress the importance of considering subjective well-being measures in family policy evaluations.