Childcare costs and the demand for children—evidence from a nationwide reform
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Exploiting the exogenous variation in user fees caused by a Swedish childcare reform, we are able to identify the causal effect of childcare costs on fertility in a context in which childcare enrollment is almost universal, user fees are low, and labor force participation of mothers is very high. Anticipation of a reduction in childcare costs increased the number of first and higher-order births, but only seemed to affect the timing of second births. For families with many children we also find a marginally significant negative income effect on fertility.
KeywordsChildcare cost Fertility Quasi-experiment
JEL ClassificationH31 J13
We are grateful for comments by two anonymous referees as well as from Matz Dahlberg, Peter Fredriksson, Christian Holzner, Rafael Lalive, Imran Rasul, and participants at seminars at IFN, IFAU, SOFI, Stockholm University, Växjö University, the IFN Stockholm Conference on Family, Children and Work and the 23rd Annual Congress of EEA in Milan, SOLE 2009, the ELE Summer Institute, Bergen 2009, the Econometric Society’s 2009 North American Summer Meeting in Boston, the 2009 NBER Summer Institute, the 2009 IIPF Congress in Cape Town, and the 2010 ASSA Meeting in Atlanta. Financial support from Riksbankens Jubileumsfond is gratefully acknowledged.
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