In 2022, women’s global labor force participation rate stood at 47%, almost 25 percentage points below that of men.

One of the key factors contributing to this divide is the disproportionate burden of domestic responsibilities that women bear. Addressing this challenge has sparked interest in the idea of providing affordable childcare services, especially for mothers who are also pursuing careers. Extensive research underscores the positive impact of accessible and affordable childcare on women’s labor market outcomes. For instance, studies reveal a strong correlation between investment in early childcare and improved labor market outcomes for women in high-income nations (Olivetti and Petrongolo, 2017). Similarly, increased access to institutional childcare appears to bolster maternal labor market outcomes in lower- and middle-income countries (Halim et al., 2023).

Yet, a lingering question remains: can policies such as childcare legislation significantly enhance women’s labor market prospects on a larger scale? The answer to this question is not obvious. While improved access to childcare services could certainly free up more time for women to engage in paid work, other factors also influence their decisions. The affordability of childcare services relative to potential earnings, the quality of these services, and societal norms about women’s role within the household are important considerations that could overshadow the impact of regulatory changes.

It’s tricky to determine whether the implementation of childcare laws can influence women’s labor market outcomes. For instance, we can’t simply compare the female labor force participation rate in countries that have a childcare law with countries without such laws because these countries may differ from each other in other dimensions relevant for women’s labor market outcomes, such as women’s educational attainment. Similarly, we can’t compare the female paid labor force participation in a country before and after it enacts a law because, over time, other changes—unrelated to the law— could have influenced female paid labor force participation.  To get around this problem, we adopt a method known as difference-in-difference estimation that does both, i.e., we compare countries before and after they enact a childcare law with countries that have never enacted such a law.

Our analysis is based on data from 80 countries spanning a 20-year period (2000-2020). We utilize the World Bank’s Women, Business, and the Law database to gather information about when the childcare laws were enacted and came into effect, alongside other regulatory indicators related to the availability, affordability, and quality of childcare services.

We find that the introduction of a childcare law leads to a 2% increase, on average, in the female paid labor force participation rate of a country. This effect is particularly prominent among married women with lower educational attainment and those aged between 35 and 44—which makes sense because these are the women for whom improved childcare services hold greater relevance and who are more likely to be outside the paid labor force in the absence of such laws. Moreover, the impact of these laws appears to strengthen over time, yielding an increase of up to 4% in female paid labor force participation five years after implementation.

While this information is compelling, it’s important to recognize that it’s only one piece of a complex puzzle. We would like to know more about how the laws impact women’s choices and why.

In the paper we also delve into the role of specific attributes of the laws related to availability, affordability, and quality of childcare services, and although it seems that availability and affordability are the most important drivers, some questions remain. For instance, how do we get regulations designed to promote childcare services to be implemented in the first place? Is it primarily driven by greater awareness, pressure from the international community, labor demands, or a combination of these factors? Moreover, what are the ultimate effects of childcare laws on women’s employment and wages? How do companies respond to these laws? We are excited to see more people exploring these areas in future research.

If you’re intrigued and eager to explore the finer details, we invite you to delve into our working paper “Filling the Gaps : Childcare Laws for Women’s Economic Empowerment.”

Happy reading!

The cover picture is designed by Nancy Folbre.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.