Child-care services and the urban labour market. Part 2: Modelling the relationships between child-care service accessibility and labour-market participation

Abstract

In part 1 of this appear we reviewed the principal features and failures of the market for child-care services in cities. A theoretical framework was developed which generated testable labour-supply and service-supply functions. In part 2, an empirical study is reported in which aggregate versions of those functions are calibrated for the supply of labour from mothers with young children and for the supply of childminding services. Special attention has been given to creating a meaningful measure of accessible childminding services. The results indicate that urban labour-market participation among mothers with young children is very responsive to the level of accessible childminders, ceteris paribus. Further, there is evidence that, at current levels of childminding activity in the cities studied, the elasticity of labour supply with respect to service supply is approximately unity, implying that child-care supply is a binding constraint on labour-force participation. Evidence is also found to support the view that childminder supply is quite insensitive to demand.