Public day care and Female Labor Force Participation: Evidence from Chile

Public day care centers in Chile have increased in 240% between 2005 and 2007. This paper uses this huge increase in public day care supply for infants of poor families to analyze its impact on Female Labor Force Participation. The magnitude of the expansion is used as a quasi-natural experiment, where different geographic areas and income groups were affected differently. Using mean differences I find a positive effect on Labor Force Participation of 2.6-10 percentage points which coincides with previous findings for Chile and the local policy common sense. After controlling for observable individual and family characteristics I don’t find any significant effect for the eligible mothers. As a robustness check I also use alternative outcome measures like employment and hours of work and I am not able to find a positive statistically significant effect. Therefore, I conclude that it is not possible yet to infer that this policy has had this desired effect.