Effects of Public Childcare Expansion on Child Penalties

Figures Figure 1: Expansion of Public Childcare for Children Aged 0-2 (a) 2007 (b) 2014 Note. This figure illustrates the public childcare coverage rate for children aged 0-2 across counties in Germany in 2007 and 2014. The coverage rate is calculated as the proportion of children enrolled in public childcare out of the total number of children aged 0-2 in each county for a specific year (Source: German statistical office). Figure 2: Trend of Child Penalties for Mothers in West Germany (a) Earnings (b) Employment (c) Days Worked (d) Daily Wage (e) Working Full-time (f) Firm Wage Level Note. The figure d isplays t he e stimated c hild p enalties f or d ifferent o utcomes e xperienced b y m others in West Germany who gave birth in the periods 2003-2006, 2007-2010, and 2011-2014. For earnings and days worked, the child penalties are estimated without conditioning on employment status, meaning that earnings and days worked are assumed to be zero for those who are not employed. For other outcomes, the child penalties are estimated conditional on being employed. Earnings are measured as annual earnings, employment is represented by a binary indicator that equals one if an individual is employed for at least 30 days per year, days worked indicates the number of ways worked per year, and the firm wage reflects the average wage of full-time workers in the firm where an individual is employed. Event time = 0 indicates the (calendar) year of giving birth. Figure 3: Public Childcare Coverage Rate in Treated and Control Counties Note. This figure describes the changes in public childcare coverage rates in treated and control counties. In our event study analysis, counties that experienced a sudden and significant increase in public childcare coverage rate (more than 5 percentage points) within a single year are classified as treated. For the treated counties, the year of the expansion (referred to as "event year = 0" or "expansion year") indicates the year when the childcare expansion occurred. For each treated county, one county is chosen among never-treated counties as a control group matched in terms of urban status, fertility rate, female employment rate, and public childcare coverage rate for two years before the baseline year using the propensity score matching. For both groups of counties, we focus on two samples of mothers: those who gave birth 1-3 years before the public childcare expansion (our main sample) and those who gave birth 4-6 years before the expansion (the placebo group). Figure 4: Pre-trends of Variables Potentially Relevant to Public Childcare Expansion (a) PCC Rate for Kids Aged 3-5 (b) Fertility Rate (c) Population Share of Women Aged 20-40 (d) Female Employment Rate Note. This figure illustrates the pre-trends of variables that may be correlated with public childcare expansion for treated and control group of counties. Panels (a)-(d) compare the pre-trends of kindergarten coverage rate for kids aged 3-5, fertility rate, population share of young women, and female employment rate between the treated and control group counties. Figure 5: Child Penalties for Mothers in Treated vs. Control Counties (a) Earnings (b) Employment (c) Days Worked (d) Daily Wage (e) Working Full-time (f) Firm Wage Note. This figure displays the child penalties for mothers in treated and control group of counties. The solid lines represent the child penalties of the main sample of mothers who had their first child 1-3 years before the public childcare expansion, while the dotted lines represent the child penalties of the placebo group of mothers who had their first child 4-6 years before the expansion. The red lines correspond to mothers in treated counties, while the blue lines correspond to mothers in control counties. Figure 6: The Effects of a Sudden Increase in Public Childcare on Mothers’ Child Penalties (a) Earnings (b) Employment (c) Days Worked (d) Daily Wage (e) Working Full-time (f) Firm Wage Note. This figure illustrates the normalized effects of a sudden 5 pp increase in public childcare coverage rate on child penalties for mothers. It represents Ef f ectt as defined in equation (3), with t denoting the number of years from childbirth. That is, the x-axis of the graph corresponds to the event time in terms of childbirth. Tables Table 1: Summary Statistics Variable Public Childcare Coverage rate Child Penalty (Earnings) Child Penalty (Employed) Child Penalty (Days Worked) Child Penalty (Daily Wage) Child Penalty (Full-time) Child Penalty (Firm Wage) Age Female Ratio Ratio of Women Aged 25-40 Ratio of College Graduate Employment Share of Manufacturing Employment Share of Public, Edu, Health Employment Share of IT Population Density Fertility Rate Unemployment Rate Mean 0.18 -0.71 -0.42 -0.56 -0.40 -0.52 -0.03 40.7 0.49 0.32 0.08 0.23 0.20 0.05 564.4 0.07 6.0 SD 0.08 0.05 0.06 0.04 0.07 0.06 0.02 0.96 0.02 0.04 0.05 0.08 0.04 0.02 691.6 0.01 2.6 Min Max N 0.02 0.44 2592 -0.84 -0.53 2592 -0.61 -0.26 2592 -0.72 -0.43 2592 -0.56 -0.19 2592 -0.70 -0.27 2592 -0.10 0.07 2592 37.1 43.9 2592 0.41 0.55 2592 0.22 0.45 2592 0.01 0.35 2592 0.05 0.52 2592 0.11 0.36 2592 0.01 0.16 2592 39.9 4601.2 2592 0.004 0.09 2592 1.2 18.5 2592 Notes. This table presents a summary of the statistics for the variables used in the main generalized difference-in-difference estimation. The public childcare coverage rate is calculated as the percentage of children enrolled in public childcare among children aged 0-2 in each county and year. The child penalty represents penalty for each labor market outcome over a five-year period after giving P the average e birth (P ct ≡ 51 ). Population density indicates the number of people per square kilometer. e = 15 Pct The fertility rate is calculated as the number of new-born babies per women aged between 20 and 40. The analysis includes 324 counties in West Germany, and the sample period spans from 2007 to 2014, resulting in a total of 2592 observations (= 324 × 8). Table 2: The Effects of Public Childcare Expansion on Child Penalties of Mothers Panel A Dependent Variable: CP ct (The average child penalty for 5 years after giving birth) Outcomes of Interest: Earnings (1) 0.14*** (0.02) Yes Yes Yes -0.71 2592 Public Childcare Coverage Xct Year FE County FE Mean of Dep. Var. N Outcomes of Interest: e=1 e=2 e=3 e=4 e=5 e=6 e=7 Xct Year FE County FE N Days Worked (3) 0.13*** (0.02) Yes Yes Yes -0.56 2592 Daily Wage (4) 0.09*** (0.03) Yes Yes Yes -0.40 2592 Full-time (5) 0.09* (0.05) Yes Yes Yes -0.52 2592 Firm Wage (6) 0.02* (0.01) Yes Yes Yes -0.03 2592 Dependent Variable: CPcte (Child penalty of e-th year after giving birth) Panel B Public Childcare Coverage Employment (2) 0.15*** (0.03) Yes Yes Yes -0.42 2592 Earnings (1) 0.13*** (0.02) 0.18*** (0.03) 0.11*** (0.02) 0.09*** (0.02) 0.07*** (0.02) 0.06*** (0.02) 0.06*** (0.02) Yes Yes Yes 2592 Employment (2) 0.21*** (0.03) 0.15*** (0.03) 0.09*** (0.03) 0.09*** (0.02) 0.05** (0.02) 0.01 (0.02) 0.01 (0.02) Yes Yes Yes 2592 Days Worked (3) 0.12*** (0.02) 0.19*** (0.03) 0.09*** (0.03) 0.06** (0.02) 0.04 (0.03) 0.02 (0.02) 0.01 (0.02) Yes Yes Yes 2592 Daily Wage (4) 0.12*** (0.03) 0.07*** (0.03) 0.09*** (0.02) 0.10*** (0.03) 0.05 (0.04) 0.05** (0.02) 0.06*** (0.02) Yes Yes Yes 2592 Full-time (5) 0.08 (0.05) 0.05 (0.04) 0.13** (0.06) 0.09* (0.05) 0.13*** (0.05) 0.06 (0.04) 0.08 (0.05) Yes Yes Yes 2592 Firm Wage (6) 0.01 (0.03) 0.01 (0.02) 0.04* (0.02) 0.05* (0.03) 0.04 (0.03) -0.02 (0.03) 0.06* (0.03) Yes Yes Yes 2592 Notes. Panel A of this table displays the estimates for the impact of public childcare provision on the average child penalty over a five-year period after giving birth. In contrast, Panel B provides the estimates for the effect on the child penalty for each individual year after giving birth. The models include a comprehensive set of county-year specific controls denoted as Xct , as presented in Table 1. Standard errors are clustered at the county level and are reported in parentheses (∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.01). The regressions are weighted using the employment size of each county in the year 2007. Appendix Figure A.1: Distribution of Changes in Public Childcare Coverage Rate Note. This figure illustrates the distribution of annual changes in the public childcare coverage rate for 324 counties in West Germany during the period between 2007 and 2014. A 5 percentage point increase represents the top 5 percent of the distribution, with 132 cases out of 2268 exceeding this threshold. This cutoff value is used to define the public childcare expansion event. Figure A.2: The Number of Cases of Public Childcare Expansion Event Note. This figure displays the number of public childcare expansion events that occurred across different years. An expansion event is defined as a county experiencing an annual increase in the public childcare coverage rate of more than 5 percentage points. In other words, if a county had a single-year increase in public childcare coverage rate exceeding 5pp, it is categorized as a treated county.