#econsky #fertility

Thanks for reading!

Full paper on my website: abigaildow.com
📄 “The Price of Parenthood: Childcare Costs and Fertility”


Check out my other papers on paid sick leave, intensive nurse home visiting, and maternal and infant health.

While based on U.S. data, the results are relevant for other high-income countries where childcare is expensive 👶💸.

What’s the policy takeaway?

Parents do respond to childcare prices in their fertility choices.

Childcare regulations impact prices, but they also protect children.

So policymakers may want to explore ways to make childcare more affordable e.g. through increased subsidies.

The data supports these predictions:


• Higher income women (proxied by education) are more price-sensitive

• Older parents spend more on formal care

• Higher-order births respond more to price

Effects aren’t uniform - declines are larger among women aged 30+

A theoretical model explains why:

Older women earn more → higher opportunity cost of time → outsource more childcare → more exposed to price shocks.

They’re also more likely to be on child #2+, where costs compound.

🎯 Main result:


A 10% increase in childcare prices for <3 year olds causes a 5.7% decrease in the birth rate for women aged 15-44 (~ 4 births per 1,000 women).

Also,
⏳ Delayed first births (by 4 months)

⏳ Longer spacing between 1st and 2nd births (by 1/2 month)

Childcare regulations are important for children’s health and safety, but they do affect prices.

An decrease in the max group size by 5 children raises weekly childcare prices by ~$5.

💰 Childcare in the U.S. is expensive: in 2022, annual costs ranged from 5% to 35% of median income.

Prices are highest in the Northeast and West Coast, but many counties elsewhere still fact childcare costs >20% of median household income.

I combine these regulation data with:


• County-level childcare prices (NDCP)
• U.S. birth records (NVSS)
• ACS, CEX, QWI, CBP for controls + mechanisms

How?

📊 I construct a new dataset of US state childcare regulations (group size limits, staff-child ratios) for 2010-2022, and use an IV approach that exploits changes in the regulations that shift the price of childcare.

I ask...

How do childcare prices affect…


👶🏻 Whether to have children?

⏰ When to have them?

👶🏽👶🏽 How many to have?

📈 Empirical evidence is limited, especially in the US, as it’s hard to find exogenous price variation.

My JMP provides the first causal evidence on how childcare prices impact fertility rates and shows empirically that childcare costs are a barrier to having children in the U.S.

Many thanks to my discussants for their feedback, and all the others who gave comments and suggestions!