Does Formal Child Care Availability for 0–3 Year Olds Boost Mothers' Employment Rate? Panel Data Based Evidence from Belgium

In 2003, a new multi-annual program aimed at increasing the availability of formal child care for 0-3 year old children was launched in Wallonia, the French-speaking part of Belgium. This paper is interested in evaluating if this increased availability of formal child care resulted in a higher employment rate for women with at least one child under 3. To this end, we use a difference-in-differences approach based on municipality-level panel data, taking advantage of the fact that the increase in availa-bility of formal child care differed greatly across municipalities. We find that the raise in child care availability significantly increased the maternal employment rate, but to a lesser extent than expected, most likely because of a substantial crowding-out effect.