The Expansion of Low-Cost, State-Subsidized Childcare Availability and Mothers' Return-to-Work Behaviour in East and West Germany

This study investigates whether increased availability of low-cost, state-subsidized childcare for under 3-year-olds in Germany is associated with shorter employment interruptions amongst mothers. By focusing on a major childcare reform in East and West Germany, we examine the effect in two contexts that differ markedly in the acceptance and use of formal childcare and maternal employment. We combine rich longitudinal data from the German Socio-Economic Panel (2006-2014) with annual administrative county-level data on the availability of low-cost, state-subsidized childcare, estimating event history models. The results indicate that increased childcare availability for under 3-year-olds reduces mothers' employment interruptions, particularly after a second childbirth, and increases the probability of returning to part-time or full-time employment as opposed to marginal employment. Furthermore, increased availability of low-cost, state-subsidized childcare increases mothers' likelihood of returning to employment in the second year after childbirth, when paid leave entitlements expire and the availability of childcare becomes important. However, our results are only statistically significant for West German mothers and only after the birth of a second child. The study extends the literature on women's return-to-work behaviour by providing evidence on the medium-term impact of family policy on the duration of mothers' employment interruptions.