OSSC Project, MAG 2024. Authors: Bettina Stiflinger (Tilburg University)
In this project, we estimate the causal effect of daycare on children’s mental health and schooling outcomes in the Netherlands. We use a very strong and policy-relevant instrument
that exploits frequent changes in government reimbursement schemes for childcare prices that induce variation in expected costs over time and province of residence. We employ a simulated instrument approach to control for the possible endogeneity in expected childcare prices.
Our sample consists of more than 10 Mio children aged 0-3 years old from 2007-2020, and each child could face up to 167 different childcare prices. This implies that we have to simulate over a billion expected childcare prices. At the CBS server, we could only perform the simulation for a small subsample. The OSSC allows us to conduct the simulation for the entire sample within a reasonable period.
Our preliminary results suggest that parents are highly price-sensitive and react to price changes by reducing childcare hours and deferring entry to childcare. Our reduced-form results
imply that attending childcare reduces drug use and improves test scores at age 12. By contrast, attending many hours leads to more drug use but has no significant impact on test scores.