Child care fee abolition and female labor supply: Quasi-experimental evidence from a developing country

Abstract

The paper studies the effects of abolishing fees in the public childcare facilities on the maternal labor supply and provides evidence from a post-Soviet developing country, Armenia, characterized with low female labor force participation and high unemployment. The reform unexpectedly introduced only in the capital city created a natural experiment which we investigate using difference-in-differences methodology. The statistically significant increase of the childcare service utilization is shown to be affecting only marginally the maternal labor supply as measured by intention-to-treat effects. The positive results are more robust when only women actually utilizing the services are considered, but all the effects obtained fade out already in the second year after the reform. The robustness of our findings is tested by a series of placebo regressions.