Do Daycares Affect Maternal Labor? Evidence from India


Daycares have a twofold role in the modern world- realizing the developmental potential for young children and allowing their parents to increase their time in other activities. In this paper, we examine the role of free daycare facilities established by the Indian government in promoting maternal employment in India. We apply a two-way fixed effects model by using the variation in the number of daycare centers located in a district and the age of eligibility of the child. Household surveys provide data on employment of mothers and child’s eligibility to attend daycare. Since the decision to work and send one’s child to a daycare is endogenous and jointly determined with women’s labor market outcomes, we calculate an intent-to-treat effect using district-level daycare availability based on administrative data. We find a positive association between maternal employment and daycare presence for eligible children. Mothers engaged in agricultural and low-skilled manual work drive this result. Particularly, mothers of young boys, with less than three children, who live in a rural household experience an increase in their employment. Child health investments are not sufficient to explain this result, suggesting that increasing the availability of daycares will boost labor force participation for mothers with young children.