DP17243 Childcare, labor supply, and business development: Experimental evidence from Uganda

Author(s): Kjetil Bjorvatn, Denise Ferris, Selim Gulesci, Arne Nasgowitz, Vincent Somville, Lore Vandewalle
Publication Date: April 2022
Keyword(s): cash transfers, child development, childcare, entrepreneurship, gender, Income, Labor Supply, pre-school
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=17243

In a field experiment in Uganda, mothers of young children are randomly offered a childcare subsidy, an equivalent cash grant, both or nothing. Childcare leads to a 44 percent increase in household income, which is at least as large as the impact of the cash grant and driven by an increase in mothers' business revenues and fathers' wage earnings. The childcare subsidy also improves child development while the cash grant does not. Overall, our findings demonstrate that childcare subsidies can be an effective policy to simultaneously promote child development and reduce poverty in a low-income context.