Household Childcare Choices and Women’s Work Behavior in Russia

Abstract

The paper models household demand for childcare, mothers’ labor force participation and mothers’ working hours in Russia. The model estimates the effects of the price of childcare, mother’s wage, and household income on household behavior and well-being. Reduced-form models of the discrete and continuous household choices are estimated jointly using the Semi- Parametric Full Information Maximum Likelihood method. This method controls for the error term correlations across outcomes, and the correlation of the error terms that can result when panel data are used. The estimations indicate that mothers’ labor force participation and working hours are responsive to changes in the price of childcare and hourly wages. The simulations presented in this paper show that family allowance transfers— intended as a means of reducing poverty—do not have a significant effect on a household’s choice of childcare arrangements. Replacing family allowances with childcare subsidies may have a strong positive effect on women’s labor force participation and thus can be effective in reducing poverty. Giorgio