The unintended consequences of childcare regulation: evidence from a regression discontinuity design

Abstract

In several countries governments fund childcare provision but in many others it is privately funded as labor regulation mandates that firms have to provide childcare services. For this later case, there is no empirical evidence on the effects generated by the financial burden of childcare provision. In particular, there is no evidence on who effectively pays (firms or employees) and how (e.g., via wages and/or employment). Our hypothesis is that in imperfect labor markets, firms will transfer childcare cost on to their workers. To analyze this, we exploit a discontinuity in childcare provision mandated by Chilean labor regulation.