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KMID : 1001320200470020143
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Social Welfare Policy
2020 Volume.47 No. 2 p.143 ~ p.174
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Effect of childcare subsidy expansion on women’s labor supply
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Lee Ji-Wan
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Abstract
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This study aims to analyze the effect of childcare subsidy which expanded to all classes on the labor supply of mothers in 2013. Furthermore, it intends to examine if the policy affects differently according to women’s educational level and the age of the child. Considering that the expansion of childcare subsidy only affects the household with a child under five years old, the analysis employs the methodology of difference in difference that identifies the causal effect of policies. It compares the before and after the policy change, 2010-2011 and 2013-2015 respectively. The analysis model includes basic model, educational level model, and young and younger child model. For analysis, the 13, 14, 16, 17, and 18 waves of Korean Labor and Income Panel Survey were employed. The main findings of the study are summarized as follows. First, as a result of the basic model, the childcare subsidy expansion from 2012 to 2013 significantly increased the propensity of women’s labor market participation. It is in line with previous research which confirmed that the childcare subsidy universalization has a positive effect on the mother’s labor supply (Lee, 2016; Yoon and Kim, 2017; Kim, 2018). Second, as a result of the educational level model, the size of the labor supply effect is larger for mothers with low educational level. Highly educated women are more likely to have elevated expectations for the quality of childcare institution, thus bearing increased opportunity cost for paid work (Yoon, 2010). Besides, their child-rearing is more difficult to be replaced by a childcare institution (Lee, 2015). Third, as a result of a young and younger child model, mothers of a younger child under 2 years-old has a slightly higher probability of being employed than a young child aged 3-5. These findings have the following implications. This study confirms that the childcare subsidy has a positive role in increasing the labor supply of mothers with a young child. It implies that the expansion of universal childcare contributes to the de-familiarization of childcare in Korea by enabling women to reconcile the paid work and childminding. Besides, this study found that the effect of childcare subsidy expansion differs depending on mothers’ socio-economic features. The labor supply effect was higher among women in low socioeconomic status, implying that the childcare subsidies further lessen the childcare burden of mothers with low educational level.
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KEYWORD
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childcare subsidy, universal childcare, difference in difference, female labor supply, policy effect analysis
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