The role of childcare provision for fertility and female labor supply

Project manager: Prof. Dr. Nicola Fuchs-Schündeln

Many countries in Southern and Central Europe have been struggling for years with extremely low birth rates and low female labor market participation. An increase in public childcare provision appears to be an effective way of tackling both problems and was recently adopted by the German government. Indeed, the Scandinavian countries appear to have been successful with such policies. However, it is difficult to establish causality in this context: do governments provide childcare when changes in norms lead to an increased desire to have children as well as an increased desired labor market participation of women, or does an expansion of public childcare provision actually increase the birth rate as well as the labor market participation of women?

This project analyzed the situation in East Germany after reunification. In the GDR, mothers were expected to return to work, while West German norms were the opposite. After 1990, many of the numerous childcare centers in the East were closed, and I analyze the effect of these closures on local fertility rates and female labor supply. The two advantages of this study are that, first, there is a large regional and temporal variation in the closure of childcare centers, and second, causality can be established by using instrumental variables from before reunification.

This project drew on a large number of data sets and was therefore carried out at the Research Data Center of the Federal Statistical Office.