Availability of Child Care in China and Families' Child Care and Labor Force Decisions

Rebecca Kilburn, RAND
Ashlesha Datar, RAND

Both families' use of child care and mothers' labor force participation are often described as being linked to the availability of both center-based and relative child care. While the role of family member availability is well documented in the literature, there is less evidence regarding the importance of center availability. This is due in part to both the paucity of data on center availability and the challenges inherent in accounting for endogenous center availability. This paper uses unusually rich data, from the China Health and Nutrition Survey, which includes information on both family member and center availability, and incorporates an estimation strategy that addresses concerns about the potential endogeneity of center availability. Our difference-in-difference estimates suggest that the availability of child care centers in China is associated with greater child care utilization and women's participation in the wage sector in urban areas. Furthermore, the results indicate that the impact of center availability in urban areas on these outcomes is sizeable. Hence, in urban areas, our findings suggest that the Chinese government's expansion of child care center availability was effective in realizing its objective of promoting mothers' labor force participation. We do not find the same results for families in rural areas, but the incidence of center care use was extremely low in rural areas, making it unlikely that we would have identified any effects of center availability. We find evidence that the placement of centers does not appear to be random, but rather that centers appear to be located in communities with higher demand for child care. Estimates of a naïve model, which simply included center availability as a covariate without using the difference-in-difference strategy, find no relationship between center availability and either of the two outcomes of interest. This implies that accounting for non-random availability of centers is an important consideration. The findings in this paper add to the literature that demonstrates the importance of family members other than parents in the household for child care and maternal work decisions. However, the results do not present a consistent picture in terms of what types of family members-grandparents versus older siblings, for example-are most important for these decisions. In urban areas, the availability of grandparents is related to higher participation in the wage sector by mothers but is not related to child care use. The type of family member that appears to affect child care use in urban areas is teenage siblings-their presence lowers the chances that the family uses outside child care for young children but does not seem to be related to mothers' participation in wage labor. In rural areas, the presence of grandparents is associated with only slightly higher rates of mothers working in the wage sector and but much lower use of outside child care by the family. The results from both the urban and rural samples demonstrate that the mother's work decision and child care choices are highly correlated, indicating that these two outcomes need to be modeled jointly as suggested by the standard economic model of families child care choices.