Does Child Care Provision Increase Women's Earnings? Evidence from the Urban Slums of Guatemala City

Kelly Hallman, Population Council
Agnes R. Quisumbing, International Food Policy Research Institute
Marie Ruel, International Food Policy Research Institute
Benedicte de la Briere, World Bank Group

This study examines women's joint decisions to participate in the labor market and to seek formal child care in the slums of Guatemala City. Both the mother's participation in the labor force and her use of formal day care are significantly affected by education and household demographics. Higher household wealth reduces the mothers's chances of working, but the value of assets she brings to her current marriage increases them. A higher community-level price for informal care arrangements raises utilization of formal care arrangements. Controlling for endogeneity of labor market participation, prices of both formal and informal care, have negative effects on earnings, but the price of formal care has a larger and more statistically significant coefficient. This suggests that interventions to lower the price of formal daycare have the potential to improve women's incomes.