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

• Kjetil Bjorvatn Denise Ferris Selim Gulesci Arne Nasgowitz Vincent Somville Lore Vandewalle
23 Apr 2022

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.