1. IMPACT OF FREE CHILDCARE ON WOMEN'S LABOR MARKET BEHAVIOR: EVIDENCE FROM LOW-INCOME NEIGHBORHOODS IN RIO DE JANEIRO GAP Workshop June 14, 2010 World Bank Regional Study on Gender Issues in LAC Ricardo Paes de Barros, Pedro Olinto, Mirela de Carvalho, Trine Lunde, Norbert Schady, Samuel Santos and Andrezza Rosalem

2. BACKGROUND

3. Policy Relevance  Impressive gains in Female Labor Force Participation (FLFP) in the past decades in Brazil  Social policy debate focusing on employment and reduced dependency on transfer programs  Subsidized child-care services targeting low-income households are expected to boost economic opportunities and earnings by facilitating women’s labor force participation  Depending on quality, child-care services are also expected to help build human capital through improved ECD outcomes

4. Impressive gains in FLFP  Brazilian women entered the labor force at a rapid pace in the past decades Source: World Development Indicators Fig. 1 Female Labor Force Participation, 1980-2005

5. High FLFP by regional standards Source: World Development Indicators Fig. 2 Female Labor Force Participation, 2005  FLFP is high in Brazil compared to other countries in the region and compared to countries at similar levels of income

6. Quality of participation still an issue  Gender wage gaps remain high in Brazil when compared to regional standards (Salas and Leite 2007, Nopo et al. 2009)  Informal employment is more common among women  Unemployment rates are higher for women, in particular young women Fig. 3 Unemployment Rates, 2007 Source: SEDLAC

7. Barriers to FLFP  Fertility  Established negative link between fertility and FLFP  Established negative link between the presence of young children in the household and FLFP  The need for flexible work arrangements  Domestic chores including childcare one of the main reasons why women prefer informal or part-time jobs  Cultural barriers  Women’s role as primary caregiver and attitudes toward women working, in particular women with young children  Perceptions of women leaving their children in the care of ‘strangers’

8. The impact of childcare on FLFP  Empirical evidence from US and Canada show that better access to childcare may  Increase women’s labor supply and earnings (Blau and Currie 2006, Baker et al 2008, Cascio 2009)  Facilitate welfare-to-work transitions (Lemke et al. 2000, Connelly and Kimmel 2001)  Evidence from Latin America also show a positive relationship between access to childcare and FLFP  From evaluations of the impact of child care (Berlinski et al. 2009, Attanasio and Vera-Hernandez 2004)  And, in the case of Brazil, estimations indicating that child care could employment and earnings of women in Rio’s favelas (Deutsch,1998)

9. The impact of childcare on FLFP (cont)  Evidence from Latin America have shown that the presence of other females in the household increases the probability of the mother being employed (Wong and Levine, 1992; Connelly et al. 1996; Deutsch, 1998)  Cultural acceptance of mothers working outside the home may be relaxed over time as beliefs are updated by observing employed mothers in the neighborhood and their children (e.g. Fogli and Veldkamp 2008, Maurin and Moschion 2009)

10. Contribution of this paper  Much of the existing literature estimates the impact of child care indirectly through household composition  However, demographic composition is likely endogenous, e.g. fertility and mother’s labor supply is jointly determined  This paper addresses this identification problem by adopting an experimental approach which relies on the random allocation of access to services.

11. Research Questions  What are the impacts of having access to free public child day-care on mothers’ labor market behavior?  How may Rio’s public child-care program be improved to enhance economic opportunities for women?

12. What about the impact on children?  Most studies looking at Early Childhood Development (ECD) outcomes of childcare show positive cognitive returns (Anderson 2007, Currie and Thomas 1995)  However, recent evidence from Canada suggest that children may in fact be worse off (Baker et al. 2008)  Difficult to assess how this will play out in low-income neighborhoods in Rio due to differences in the quality of both parental care and child care services  This paper is linked to a broader research program that aims to evaluate also the ECD outcomes of childcare

13. PROGRAM

14. Rio’s Public Day-Care Program  Targets children ages 0-3 from low-income, disadvantaged households  Offers an integrated Early Childhood Development program  Full time daycare  Health services  Food  Instructional toys and material for children  Involvement by parents to foster good parenting practices.  244 day-care centers in low income neighborhoods of Rio  Program objectives:  Boost human capital accumulation by the poor  Encourage mothers to seek employment and increase their earnings, thereby improving their own well-being and the well-being of their households.

15. Selection process 2007/08  Two-day application window  All applicants with special needs have priority access up to two per class. One or two children with special needs count as five vacancies.  Each daycare center director could fill, during the application window, up to 10% of their vacancies or at least 4 slots using whatever subjective criteria they wish  All remaining vacancies were publicly randomly allocated among the applicants fulfilling at least one of the objective criteria established by the municipality:  Mother need the daycare center services to work  Total family income below 2 minimum wages  Any member of the family have a chronic disease  Any member of the family have a alcohol problem or is a drug user  Children in families with episodes of domestic violence  Any member of the family is in conflict with the Law.

16. Study design

17. Randomization Process  Approximately 25,000 children applied for the 10,000 slots in the Creches  Of these, approximately 24,000 were eligible  Randomization was done by grade (depending on the slots available in each grade)  Each child was given a “ranking”  Control children were put in a waiting list

18. Sample Design  Sample of 4348 children (50% treatment)  Sample draw from top of list (treatment) and bottom of list (control) to minimize probability of control in the sample to eventually get in  87% (3777) children found in household survey  49.4% control, 50.6% treatment (no attrition bias)

19. TESTING for RANDOMIZATION VALIDITY

20. Using the Registration Data

21. Household Per-capita Income

26. Using the Sample Survey Data

27. VariableControlTreatmentDifferenceP-value Child is female5047312 Child is white3335-217 Cild’s birth weight31513186-3528 Child’s length at birth49 081 Mother is white2527-226 Pregnancy was planned3335-224 Breast Fed till 6 months7775212 Mother’s age29 076 First child4443136 Age when had first child20 056 Has birth certificate100 041 Mother completed secondary 4043-313 Child and Mother’s Characteristics

28. VariableControlTreatmentDifferenceP-value Household members55054 Members younger than 411069 Members older than 1522021 Has electricity9291165 Paved road6669-3**4 Number of rooms44-0.1**4 Number of bathrooms11019 Piped water97 036 Sewage94 068 Garbage collected74 079 Bolsa Familia beneficiary293048 Microcomputer in household1720-3**4 Water filter6670-4**0 Household Characteristics

29. VariableControlTreatmentDifferenceP-value Has enrolled in any day care in the past 912-3**2 Was enrolled in any day care in 2007 812-4**3 Was enrolled in muni day-care in 2007 3.46.8-3.4**4 Past Enrollment in Day Care

30. VariableControlTreatmentDifferenceP-value Worked in July 2007 3037-6.5** 0 Worked in August 2007 3036-6.3** 0 Worked in September 2007 3036-6.2** 0 Worked in October 2007 3036-6.0** 0 Worked in November 2007 3036-6.1** 0 Worked in December 2007 3137-6** 0 Worked sometime in 2007 3542-7** 0 Past Labor Market Participation

31. Impact Estimates

32. Enrollement in Creches: Take up  94% of treatment children enrolled in municipal creches  Of 8% not enrolled, 23% went to another type of day care  51% of control enrolled in municipal creches  Of 49% NOT enrolled in municipal creches  16% enrolled another type of creches  84% not enrolled in any creches

33. Intent to Treat EstimatesIV Estimates Outcome VariableCont.Tr.DiffSECont.Tr.DiffSE Currently working41.145.24.21.6**36.245.89.63.7** Working or looking for job76.679.02.51.4*73.779.45.73.1* Unemployed mothers46.442.8-3.61.8**50.442.1-8.34.1** Daily hours worked8.2 -0.04 8.38.2-0.100.3 Worked in Jan 200831.337.96.61.5**23.638.815.23.6** Worked in Feb 200831.738.26.51.5**24.039.215.13.6** Worked in Mar 200832.638.45.81.6**25.839.313.53.6** Worked in Apr 200833.438.95.51.6**26.939.712.73.6** Worked in May 200833.839.96.11.6**26.740.814.13.6** Worked in Jun 200834.440.35.91.6**27.441.113.73.7** Worked once in 200838.646.27.71.6**29.547.317.83.7** Working if did not in 200713.016.53.61.5**8.717.18.43.4** Working if worked in 200786.887.60.81.886.087.71.74.0 Impacts on Labor Market Outcomes

34. Intent to Treat Estimates Outcome VariableControlTreatmentDiffSE % of mothers with children enrolled in privately paid day-care centers 5.80.0-5.80.5** % of mothers with children in private day-care before the lottery, who also used private day-care in 2008 (204 observations) 33.00.0-33.05.7** Does Free Public Day Care Crowds Out Private Provision?

35. Conclusions  Access to publicly provided child care does seem to significantly increase female labor force participation, especially for women not previously working  There is no significant impact on the intensive margin. Mothers do not seem to make working women work more hours  Provision of free day seems to crowd out private provision