Free childcare will do little to increase female workforce participation
e61 Institute
e61 Institute Research Economist Erin Clarke is available to comment on how e61 Institute research supports the Productivity Commission’s finding that the effects of free and/or more subsidised childcare would actually have a relatively insignificant effect of female workforce participation.
e61 Research Economist Erin Clarke:
“Childcare has a proven impact on childhood development and its broadening can therefore be considered a valuable policy goal on those grounds alone. However, if the goal is to lift female workforce participation, policymakers will need to look beyond changes to the childcare system.
“The impact of cheaper childcare on women’s work is not as straightforward as one may think.
“As the Productivity Commission report makes clear, increasing childcare subsidies for low-to-middle income households may not on its own be sufficient to encourage mothers to increase their labour supply. Their estimates of the negligible to small impacts of increased childcare subsidies on female participation across a range of proposed options is broadly consistent with soon to be released e61 research.”
“The decision of mothers to work, or work more hours, is impacted by a range of factors. One of these factors is the cost of childcare but, for lower-income families, the interaction of the tax and transfer system will also have an impact on their decision to work (e61 research). For many, as they work more hours and their income increases, they are eligible for fewer benefits, which could create a disincentive to additional work.”
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