Poor rich women? Labour market effects of de-subsidising childcare for high-income mothers

Abstract

We investigate how subsidies affect the labour market outcomes of women in high-income households, where child penalties are often steeper but childcare expenses might be easier to pay out of pocket. Using a stacked difference-in-difference design and admin data, we examine a 2013 reform which curtailed childcare subsidies for high-income households in the Netherlands. For women affected by the reform, we find steeper post-childbirth earnings losses and reductions in labour supply at the extensive and intensive margin, depending on the child’s age at subsidy loss. Use of unpaid leave increases in the first period after childbirth, followed by more frequent moves to female-dominated and part-time intensive sectors. We show evidence of heterogeneous responses based on how much women contributed to household income and their employment sector before childbirth. Suggestive evidence points to protracted employment losses in the medium term. Joint work with Olivier Marie and Renske Stans.