The impact of childcare costs on the full-time/part-time employment decisions of Australian mothers

Using data from the HILDA (Household Income and Labour Dynamics), this paper examines the implications of childcare costs on maternal employment status by distinguishing between full-time and part-time work. Our empirical approach uses an ordered probit model taking into account the endogeneity associated with both wages and childcare costs. Results indicate that childcare costs have a statistically insignificant effect on the decision to work either full time or part time. Moreover, the reported elasticities of part-time and full-time work with respect to childcare costs are relatively low. Finally, our results indicate that Australian mothers respond to an increase in wages by increasing both their full-time and part-time employment. Conversely, an increase in the number of young children (particularly under four years of age) and an increase in non-labour income reduce the likelihood of the mother is observed to be working.