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 availability 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.