No.10 Effects of Child Care Prices on Women's Labor Force Participation in Russia 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 mlokshin@worldbank.org.

The full-length paper is available in PDF format.