Female Labor Supply and Child Care Supply in Chile

Abstract

We use a specially designed survey to evaluate the effect of several public policies on female labor force participation in Chile. First, we estimate a self-selection model to find the determinants of female labor participation and wages. Our participation estimates show that schooling is highly positively correlated with participation and being married or having a partner is negatively correlated with participation. Also, we found that having a daycare center close to either their home or place of work and that the center’s hours of operation match labor hours are positively correlated with participation. We simulate changes in these two variables: closeness and compatible hours, which can be subject to public intervention, and evaluate the effect on labor participation, poverty, household income and income inequality. All these policies have a positive impact on labor force participation, which could increase by eight percentage points. The per capita income of these women’s households increases by and 8%, however there is almost no effect on poverty and inequality since most of the women who benefit from these policies come from middle class households.