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7.1Chapter Summaries . . . . . . . . . . . . . . . . . . . . . . . . . . 133 7.1.1 Chapter 2: Child care prices and female employment . . . . 133

7.1.2 Chapter 3: Parental leave and female labor market outcomes 135

7.1.3Chapter 4: Child care quality and competition . . . . . . . . 136

7.2.1Implication I . . . . . . . . . . . . . . . . . . . . . . . . . 139

7.2.2Implication II . . . . . . . . . . . . . . . . . . . . . . . . . 139

7.2.3Implication III . . . . . . . . . . . . . . . . . . . . . . . . 140

7.2.4 Implication IV . . . . . . . . . . . . . . . . . . . . . . . . 141

7.3Limitations and future research . . . . . . . . . . . . . . . . . . . . 141

5.11Effects on individual quality indicators . . . . . . . . . . . . . . . . 107

5.12QREG, CIC and TDID estimates using center averages . . . . . . . 108

6.1 Category Definitions and Budget Constraints . . . . . . . . . . . . 112

6.2Sample Characteristics and Hourly Wages . . . . . . . . . . . . . . 118

6.5Determinants of child care use and employment . . . . . . . . . . . 123

6.8OLS estimates for female full-time and part-time wages . . . . . . . 127

6.9 OLS estimates for quality and price . . . . . . . . . . . . . . . . . 128

6.10Alternative specific conditional logit estimates . . . . . . . . . . . . 129

6.11Mixed logit estimates without siblings . . . . . . . . . . . . . . . . 130

6.12Mixed logit estimates with unbalanced sample . . . . . . . . . . . . 131

5.9# of classroom observations each month . . . . . . . . . . . . . . . 105

5.10Distribution of child care quality in daycare centers’ (averages) . . . 106

5.11Distribution of child care quality in playgroups’ (averages) . . . . . 106

6.1Predicted Female Income Distributions According to Employment . 118

6.2Daycare subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

6.3 Predicted Hourly Wages . . . . . . . . . . . . . . . . . . . . . . . 127

how child care quality is produced and influenced by policy measures. Positive findings from the UK and USA of targeted intervention programmes such as STAR, Perry Preschool and Sure Start do not prove that large scale investments can also have large effects on child development, but they do give an indication of the potential returns to child care policies focused on improving quality (Melhuish et al., 2008; Heckman et al., 2010; Chetty et al., 2011).

This thesis begins by evaluating the literature linking child care prices to labor supply and attempting to explain the differences in the findings. The previous studies focus mostly on the empirical link between prices and labor supply. The next chapter covers parental leave, where researchers tend to use micro level data of mothers to identify the effects of taking up leave on rates of return to employment and wages (Ondrich et al., 1996; Lalive and Zweimüller, 2009). I provide an aggregate level analysis in terms of employment rates, working hours, occupational segregation and wages, which extends and updates the previous studies that focus on employment and wages (Ruhm, 1998).

Child care quality has recently received increasing attention from researchers and policymakers (Bennett and Tayler, 2006). The change in terminology among policymakers and academics from child care to early childhood education and care (ECEC) seems to underline the transition from viewing child care as a service that facilitates parents employment to one that plays a role in human capital formation. Education in later years have long been studied with regard to how privatization of schools and spending in education affect educational quality (Hanushek, 1994; West and Woessmann, 2010). Since there is a general trend towards privatization of welfare state functions including child care services across OECD countries, the same questions analyzed for schooling are becoming more relevant also for the child care sector. I extend the literature on schooling quality to the early childhood years by analyzing how child care quality is affected by competition among centers and by public spending. In the final chapter, I go back to the literature on child care and labor supply and extend it by analyzing how quality influences female labor supply.

Apart from the literature review in chapter 2, the methods of analysis are empirical. Identification strategies include both structural modeling and exploiting policy changes. Chapter 3 uses aggregate level data from OECD countries in general while the remaining chapters use micro level data from the Netherlands. In the next section I discuss the state of female employment during motherhood and child care services across OECD countries and discuss how quality is being measured. The final section

of the introduction provides a general overview of the chapters’ research questions and methodology.

1.1Trends in Female employment and the measurement of quality

Figure 1.1 shows the labor force participation rates of women in the EU-15, OECD and the Netherlands over the period 1970-2010. The participation rate has gone up by around 15% points among OECD countries. The rise in female labor force participation in the Netherlands is particularly large since it starts very low and increases quickly to levels exceeding OECD and EU averages. Despite high participation rates among women across OECD countries, figure 1.2 shows that employment during motherhood is unsurprisingly low in most countries. The more relevant point to highlight in figure 1.2 is that the gap between female employment and maternal employment differs across countries. This seems to suggest that country specific child care policies and institutions have a large role to play in determining women’s employment decisions and vice versa.

The generosity and provision method of child care services and parental leave entitlements vary considerably between OECD countries. Traditionally, child care has been viewed as a function of the welfare state. Nevertheless, similar to service sectors such as schooling and health care, there is a mix of provision methods among OECD countries ranging from public supply and financing to private market provision and parental fees (Kamerman, 2000). Figure 1.3 shows that child care spending varies considerably even among high income OECD countries. Parental leave policies also differ as shown by the take up rates in figure 1.4. Entitlements range from rights to year long, fully funded leave periods in Sweden to only 16 weeks of paid maternity leave and 3 months of unpaid parental leave in the Netherlands. In addition to crosscountry differences, child care and parental leave policies tend to be dynamic over time. From relatively short leave periods exclusive to women in the 1970s, many Nordic countries’ parental leave policies have evolved into long, generous leave periods with specific rights for fathers. As recent as 2009, the German parental leave system was overhauled with shorter leave periods with more generous benefits. Child care systems and financing are similarly fluid, with the Netherlands privatizing the child care system in 2005 and Germany beginning a major expansion of child care

Figure 1.1: Female Labor Force Participation 1970-2010

Source: OECD Family Database

Figure 1.2: Female Employment and Motherhood 2009

Source: OECD Family Database

services in 2008. Given the fluidity of child care and parental leave policies over time and across countries, policymaking requires evaluations of their effects on both mothers’ employment and children’s experiences.

The increase in female labor force participation seen in figure 1.1 has translated into large scale child care services in many OECD countries. Figure 1.5 shows that more than 60% of children under 3 in Denmark and the Netherlands are enrolled in