Labor Market: Study Finds More Childcare Raises Mothers’ Earnings

More childcare places can reshape mothers’ working lives long after their children leave daycare, according to a study by Germany’s Institute for Employment Research, known as the IAB.

Researchers examined regional differences in the expansion of public childcare for children under three and tracked the employment paths of women who had their first child between 2001 and 2014. The sample included women who had been working before giving birth, with about 240,000 mothers in each birth cohort.

The study found that mothers earned more after the 2007 parental allowance reform. The expansion of childcare accounted for 56% of the overall decline in employment-related losses, according to the findings. Women also worked full time more often and relied less on marginal employment, including so-called mini-jobs.

“The availability of early childhood care also has a lasting influence on mothers’ further career development,” IAB researcher Lisa-Marie Duletzki said. Mothers still take on most childcare after the birth of their first child and often reduce their paid work, a decision that can cause lasting income losses.

The strongest effects appeared in regions where mothers had frequently reduced their employment after childbirth or suffered particularly large long-term income losses. Those areas often had lower childcare coverage before the expansion, suggesting that availability had been limited and demand for newly created places was high.

Duletzki wrote that Germany currently lacks about 300,000 places for children under three. She concluded that continued expansion of early childhood care could help reduce gender inequalities between men and women in the labor market.

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The availability of early childhood care also has a lasting influence on mothers’ further career development.