Across the world, child care has been associated with lower female labour force participation. Childcare can, in principle, be outsourced to nurseries, but that depends on the local availability of such public services. Using data from the city of Sao Paulo, this study provides stylised facts about families’ employment, childcare availability and use. the study documents that nurseries are consumed locally and that the provision of state nurseries is heterogeneous in space. In the absence of market nursery services, couples are faced with a decision; one person may go to work, and the other can do the childcare at home, and this specialisation is gendered. However, if one of them doesn’t work, they may choose to live in less central locations to afford lower rents. How does the local availability of nurseries affect residence location and labour supply choices of families with babies?
This study considers the effects of increasing access to state nurseries, which are allocated based on residence location, considering the potential general equilibrium effects that increasing local availability may have on sorting and rents. The study combines a series of administrative data to study this question, with two main sources. The main data source is the Household Travel Survey for the City of Sao Paulo. This data have detailed information about geolocated daily trips, and household and individual characteristics, which allow for a deeper look at how family characteristics interplay with location choices of residence, labour supply and workplace, and childcare. The study also uses data from the Department of Education from the Sao Paulo Municipality, with geocoded information about the availability of nursery seats by neighbourhood, and the local demand for seats. The study also develops a quantitative spatial model which allows families to choose where to live and work, considering the neighbourhood availability of childcare. With the model, the study can run counterfactuals to learn what the spatially optimal allocation of childcare is.
The research is useful for policymakers that are concerned with the insertion of women in their local labour market, and that want to learn what policies and public services could do that. If some public services are desirable and are consumed locally, policymakers should know that increasing provision could affect prices, and families may move residence location in response to the increased availability. The model is used for childcare but it can be used for any home production service that could otherwise be outsourced locally. This is particularly relevant for low-income countries with scarce resources that want to optimally provide public services or subsidies, considering the general equilibrium effects.
