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November 27, 2017

Can universal preschool increase the labor supply of mothers?

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Since the 1970s, a large number of countries have instituted free or highly subsidized education and childcare services for all children below the compulsory schooling age. In most cases, an important objective of these policies has been to make it easier for women to combine paid work and childcare responsibilities to increase maternal labor force participation. 

Findings from a large and robust literature evaluating these policies reveal that providing subsidized preschool education has had mixed impacts on maternal employment across countries and across different groups of mothers within countries. In some countries, such as the US and Norway, offering free care to preschool children has had no impact on maternal labor supply. In others, such as Spain and Canada, it has led to significant increases in maternal employment. 

There are a few key factors that seem to influence the effectiveness of universal preschool on mothers’ labor supply. Impacts are lower in countries where mothers had access to private preschool education or typically used informal providers, such as grandparents. There, new subsidized preschool places simply replaced alternative arrangements for many mothers, but left the labor market behavior of most mothers unaffected. 

Second, subsidizing preschool education has had larger impacts in countries where mothers’ employment was relatively low before the policy. One reason is that countries with low maternal employment are likely to be those where mothers are most financially constrained by the cost of preschool education. Additionally, in countries where maternal employment is already high, there may be little scope for increasing it if the women who are not in the labor force have particularly strong preferences for caring for their children. However, this evidence should not be interpreted as suggesting that subsidizing preschool will necessarily increase maternal labor supply if initial maternal employment is low. Indeed, a low rate of maternal employment could reflect a variety of other barriers to female employment, such as slow economic growth or social norms that are unfavorable to maternal work, which will weaken the effect of the policy on maternal employment. 

Third, policies expanding access to preschool usually affect groups of different mothers very differently. In most cases, these policies only benefit mothers who do not have other, younger children, and studies have found that single mothers often benefit more from these policies than mothers in two-partner families. This can be explained by the fact that single mothers are more likely to be constrained both financially and in terms of when they can work compared to married mothers, although their earnings are likely to be lower than those with higher education. 

It is important to recognize the limitations of this research. The characteristics of the policies that have been evaluated differ widely—in the age of the children they target, the amount of free education they provide, and the flexibility with which parents can use the subsidy. To date, there is little evidence on how these factors determine the impact of universal preschool on mothers. It is also key to recognize the wide differences in institutional contexts in which these policies have been introduced. In most contexts, universal preschool interacts with such policies as parental leave, flexible working, and other work incentives (e.g. working tax credits). Understanding these interactions is crucial to designing optimal policies that create an economic and cultural environment that encourages mothers to work more.

Sarah Cattan's full article "Can universal preschool increase the labor supply of mothers?" is available here.

Read more of our articles on childcare policy and maternal employment

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We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.