Effects of Child Care Prices on Women's Labor Force Participation
By Michael M. Lokshin
The paper models household
demand for child care, mothers' labor force participation and working hours,
in Russia. The model estimates the effects of the price of child care, mother’s
wage, and household income on household behavior and well-being. The theoretical
model yields several predictions. To test these, reduced-form models of the
discrete and continuous household choices are estimated jointly using the method
of Semi-Parametric Full Information Maximum Likelihood. This method controls
for the error term correlations across outcomes, and the correlation of the
error terms which is the result of the panel structure of the data. The results
of the analysis indicate that mothers' labor force participation and working
hours are responsive to the price of child care and hourly wages. The simulations
presented in this paper show that family allowances – intended as a means of
reducing poverty – do not have a significant effect on the household choice
of child care arrangements. Replacing family allowances with child care subsidies
may have a strong positive effect on women's labor force participation and thus
can be effective in reducing poverty.
This paper is part of a series of papers on selected topics commissioned for the forthcoming Policy Research Report(PRR) on Gender and Development. The PRR is being carried out by Elizabeth King and Andrew Mason and co-sponsored by the World Bank’s Development Economics Research Group and the Gender and Development Group of the Poverty Reduction and Economic Management Network. Printed copies of this paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Owen Haaga, in room MC8-434 or at Gnetwork@worldbank.org. Comments are welcome and should be sent directly to the author(s) at firstname.lastname@example.org.
The full-length paper is available in PDF format.