The impact of access to free childcare on women's labor market outcomes : evidence from a randomized trial in low-income neighborhoods of Rio de Janeiro

Abstract

The brief summarizes the impact of access to free childcare on women's labor market outcomes: evidence from a randomized trial in low-income neighborhoods of Rio de Janeiro. The lottery for selection into ECD was carried out in 2007. The impact evaluation of Rio de Janeiro's public day-care program aims to answer the following three questions. First, how large is the increase in labor force participation of mothers due to the increased access to free child care? Second, what does the increase in labor force participation, if any, suggest about the net cost of the policy (subsidies offered minus new tax revenue collected)? Fourth, does public provision crowd out private provision? Finally, what effect does any change in child care (and associated increases in labor force participation) have on child and family outcomes? GAP funds contributed toward an additional job seeking skills training intervention implemented in half of the sample. The authors find that access to free publicly provided child care services led to a very large increase in the use of care, a considerable increase in mothers' employment (from 36 to 46 percent), and an almost doubling in the employment of mothers who were not working before the lottery took place. The authors find no statistically significant impact on hours worked for mothers who were employed, however. This rise in mothers' employment is associated with a modest increase in household incomes of 16 percent (from an average of R$569 to R$661 per month). Finally, the authors also find robust evidence that the public provision of free child care crowds out private provision, even in low income neighborhoods. Therefore, given that the estimated income impacts are smaller than the cost of public provision, direct transfers via vouchers for child care may be more cost effective than subsidized care via public provision.