The Impact of Young Children on Women’s Labour Supply

Abstract

The proportion of women who withdraw from paid employment when they have children differs considerably among the countries of the European Union (EU), and the variation has mostly been attributed to institutional factors. In this study, we reassess the institutional explanation, because earlier supportive evidence is threatened by two alternative macro-level explanations: the influence of the economic necessity to work and the influence of gender role values in society. Our main research question is whether and to what extent these alternative explanations alter the effect of public childcare arrangements on mothers’ labour supply. Using panel data from 13 countries of the EU, we find evidence in favour of the institutional and economic explanations. In countries with more generous provision of public childcare and in countries with a lower level of economic welfare, the impact of childbirth on female labour supply is less negative than in other countries. Economic welfare appears to suppress rather than rival the institutional effect. More egalitarian gender role values in a country increase mothers’ labour supply, yet these values do not alter the institutional effect. Our results underpin the importance of publicly supported arrangements for enhancing female labour supply.