Publication: Caring for Children and Firms?: The Impact of Preschool Expansion on Firm Productivity
Johnson, Hillary C.
Ryandiansyah, Nabil R.
Childcare services enable women who were previously unable to work due to taking care of their children to join the labor market. If some women are more productive in market work, rather than unpaid household work, the availability of childcare can potentially improve the allocation of talent across different occupations, triggering an increase in productivity. This paper tests this hypothesis using a survey of manufacturing plants and data on preschool expansion in Indonesia. The analysis relies on a triple difference estimation comparing plants in sectors with different degrees of female labor at baseline. The results suggest that between 2002 and 2014, when a rapid preschool expansion took place in Indonesia, an additional preschool per 1,000 children increased the total factor productivity of manufacturing plants by 11 percent for plants with an average fraction of female workers. The paper provides suggestive evidence that these effects were driven by better labor market matching, enabled by the expansion of female labor supply, and greater job stability for female employees. The results unveil a novel short-term economic impact of childcare services, which complements the long-term growth impact through human capital accumulation.
“Cali, Massimiliano; Johnson, Hillary C.; Perova, Elizaveta; Ryandiansyah, Nabil R.. 2022. Caring for Children and Firms?: The Impact of Preschool Expansion on Firm Productivity. Policy Research Working Papers;10193. © World Bank, Washington, DC. http://hdl.handle.net/10986/38076 License: CC BY 3.0 IGO.”
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