The approach of the authors is that in order to find the most effective mix of policies and forecast the benefits of investment in childcare expansion, it is important to estimate the impact of childcare on mothers’ labor supply precisely.

They analyze the case of mothers of 3-year-olds in Hungary, who are much more likely to be able to enroll in state-run kindergartens if they turn 3 before the 1st of January. In Hungary, private childcare is relatively expensive and unaffordable for many people, so subsidized staterun institutions provide the primary form of childcare. Subsidized nursery schools accept children between the ages of 5 months and 3 years, while kindergartens accept children from age 3 to 6 in the analyzed period.

In the methodology, researchers used a dataset of sample that includes mothers with or without a partner, for the years 1998-2011 and included mothers with 1 or more children, excluding fathers from the analysis. They found that around the age of 3 not only does childcare availability increase, but parental leave also ends, and the willingness to separate from the child grows rapidly, as well.

Their result enables them to forecast the expected impact of childcare expansion: for example, the government recently changed eligibility rules so that all children can enroll in kindergarten immediately after they turn 3. This should lead roughly to the same increase in mothers’ activity around 19 percent.

Read HETFA Working Paper No. 9. »

]]> https://hetfa.eu/2014/11/hetfa-experts-contribution-to-the-imf-report-on-hungary/ Fri, 21 Nov 2014 13:45:23 +0000 https://hetfa.eu/?p=1162 In the series of the IMF Country reports on Hungary, the No. 14/156 issued in June 2014, refers to two papers prepared by HETFA expert, Agnes Szabo-Morvai.

Concerning Hungary’s potential output growth, the report concludes that Hungary’s growth performance has been weak in recent years. The IMF sees that the medium term growth prospects –although somewhat improving – remain subdued, because of persistent interventionist government policies are likely to continue depress private investment and labour market performance, while gradually improving, is held back by the low participation rate, weak labour productivity, and skill mismatches.

Looking at Hungary’s external vulnerabilities, the report concluded that they remain significant in the economy, the still-high external debt and resulting financing needs, sizeable open positions, and continued dependence on non-resident demand for HGBs make Hungary exposed to external shocks.

The report deals with the Hungarian labour market, as well, sharing results that say that recent reforms in Hungary have been relatively successful in activating potential labour market participants, especially those that had been covered by early retirement or disability pensions, but overall policy coherence is still lacking and more needs to be done to help increase the low participation and employment rates.

In the referred papers of HETFA’s expert, Agnes Szabo-Morvai contributing to the part of the report on the Hungarian labour market, she examines the effect of Maternity Labour Supply for mothers on their employment. She comes to the conclusion that the Maternity Labour Supply for two years has no significant effect, but in the third year, even if with less amount of supply, it has a negative effect on the mothers’ employment, especially, on those with low level of education. She also tries to estimate the causal impact of subsidized childcare availability on Hungarian mothers’ labour market participation around the 3rd birthday of the child. These estimates indicate that a mother with a 3 year old is 15% more likely to be active if her child is eligible for subsidized kindergarten. However, the study also points out that increased subsidized childcare availability and parental leave alone cannot explain the sharp increase in the rate of maternal participation seen around children’s 3rd birthday, highlighting the importance of other factors such as separation preferences and flexible work forms.

Related papers:

Szabó-Morvai, Á. (2011): Labour market effect of child benefits: The Case of Hungary, mimeo
Lovász, A. and A. Szabó-Morvai, (2013), Does Childcare Matter for Maternal Labour Supply? Pushing the Limits of the Regression Discontinuity Framework, Budapest Working papers on the Labour Market 2013/13

 The research, funded by the National Scientific Research Fund, implemented by HETFA Research Institute and the Institute of Economics of the Centre for Economic and Regional Studies of the Hungarian Academy of Sciences, draws on the effects of childcare on maternal labour supply in Hungary.

We use a variant of the regression discontinuity method to estimate the effect of subsidized childcare availability on mothers’ labor supply when other factors (maternity leave, preferences regarding separation) change simultaneously. We separate the age and calendar-specific childcare effect from those that are only age-specific by comparing treatment and control groups by holding children’s age constant, and combine RD with difference-in-differences to account for seasonal effects. Our estimates suggest that childcare availability has a significant positive impact of around 18%. The results highlight the importance of methods that control for endogeneity and concurrent age-related effects, and a comprehensive policy approach.

The research paper is available in English »

]]>