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 years old children was started 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 larger employment rate for women with at least one child under 3 years old. To this end, we use a difference-in-differences approach based on municipality-level panel data, taking advantage of the fact that the increased availability of formal child care widely varied across municipalities. We find that the raise of child care availability significantly increased maternal employment rate, but to a lesser extent than expected, most likely due to a substantial crowding-out effect.