Investments in early education and mothers’ and children’s outcomes, evidence from Italy

Public policies which increase women’s access to early childhood services can stimulate women to keep working or enter employment after motherhood, in addition to promoting the cognitive and non-cognitive development of their children. Yet, existing research does not provide unanimous support for subsidized childcare. While the literature generally indicates a positive relationship between daycare and maternal labor supply, this effect is highly heterogeneous across countries. In addition, while childcare is generally believed to benefit children from disadvantaged backgrounds, it may have the opposite impact on those from affluent families. Moreover, the impact of daycare on children below the age of two has not received much attention in the literature. In this thesis, I investigate the effects of early care for toddlers (below the age of three) on mothers as well as children. In Chapter 1, I analyze the effectiveness of a large-scale program for early childcare development in Italy, extending previous work by Giorgetti and Picchio (2020). The staggered introduction of the program across Italian regions allows using a difference-in-differences framework as identification strategy. I find that the policy has a positive and lasting impact on the supply of nurseries while leading to a short-lived increase in childcare attending rate. I explore several possible mechanisms behind these results, such as the cost of early care and mothers’ preferences for very young children to be taken care of by family. In Chapter 2, I investigate the impact of expanding childcare on female attachment to the labor market. To do this, I use the Italian extraordinary financing daycare plan as an instrument for change in daycare availability. The results show a sizeable effect on mothers’ participation and employment and significant increases in monthly wages for married women. In particular, the availability of childcare mainly affects mothers whose children are older than 24 months. The effect is also particularly pronounced for mothers of boys and those from affluent households. In Chapter 3, I study the effect of early childhood services on children’s school performance. Using variation in the availability of Italian nurseries induced by the extraordinary funding plan for early childhood services, I find that daycare has negative effects on primary school performance. This negative impact, however, is driven by younger children and by those from more affluent families. In contrast, I find positive effects for children from disadvantaged backgrounds.