Does financial assistance for child care encourage female employment? The example of the creation of the “PAJE” child support service in France
Having young children has a significant effect on female employment. Mothers in the great majority keep on a professional activity after the birth of their first child, but stopping employment is more frequent after the second and especially the third child. Stopping employment may reflect personal preferences, and also constraints related to the availability and cost of childcare. But the net cost of childcare for families dropped sharply in 2004, with the creation of the “PAJE” child support service. This resulted in a significant increase in assistance for childcare and an extension of rights to a basic allowance for parents of young children. Its implementation has been gradual, which created temporary differences in rights to benefit depending on the year of birth of children. These differences can thus isolate the impact of the cost of childcare from other factors, with an influence on employment for mothers of young children and the decision to use paid care. The result of the introduction of the “PAJE” was an average increase of 1.1 percentage points in the rate of employment for women whose youngest child was two years old. The effects are different depending on the size of the family. The implementation of the “PAJE” had no effect on the rate of employment of mothers after the birth of their first child, but it allowed some of them not to reduce their amount of employment. It increased the employment rate for mothers with two children or more, by 1.6 percentage points; this increase in activity is reflected rather in the take up of part-time employment or employment for part of the year only. The increase in benefits appears to have prompted some families to use paid-for, rather than informal childcare. The introduction of the “PAJE” indeed had a greater effect on the use of registered paid-for childcare than on the professional activity of mothers of young children: + 1.8 points compared to 1.1 points.