THE EFFECT OF CHILD-CARE COSTS ON MARRIED WOMENS LABOR-FORCE PARTICIPATION

The effect of child care costs on the probability that married women with children will participate in the labor market is examined. Child care costs are estimated using a generalized tobit specification corrected for selection. Estimates of a structural probit model of labor force participation provide evidence to support the prediction that increased child care costs lower the probability of participation. It is also shown that the lower rate of labor force participation among mothers of preschoolers is entirely the result of the higher child care costs faced by these women, and endogeneity of the number of young children in the participation equation.