The aim of this study is to evaluate the effect of the child care subsidy program that was made available in 2012 for all children aged 0-2 years and all 5 year olds, regardless of their household income. Before that, child care assistance was provided according to family income level. Policy evaluation was carried out in terms of the impact of the new program on household child care cost, women’s labor force participation, and the willingness to give birth. Our difference-in-difference regression analysis covered “infancy” (comparison between 0-2 year olds and 3-4 year olds) and “early childhood” (comparisonbetween 4 year olds and 5 year olds). The effect of the new subsidy program differed between infancy and early childhood.
In terms of household child care cost, there was an effect of reducing facility utilization fee and education costs for infancy and the policy effect was greater for households with working mothers. On the other hand, it was shown that there is a limited effect of reducing the facility utilization fee for the early childhood and the policy effect was greater for the households with non-working mothers. The expanded subsidy program wasfound to have increased the probability of women’s labor force participation for the high income group and increased the working hours for the middle income group. When it benefited infants, the child care subsidy program had the effect of increasing the probability of having a plan to have a child for the high income group; it also increased the intention of middle income group to have an additional child. The subsidy program reduced the probability of high income families with young children having a plan to have an additional child and increased the intention of lower income family to an additional child.
Several policy implications can be drawn from these findings. The government needs to provide differentiated support for children of different age groups. In addition, the subsidy program should be linked to mothers’ employment status in a way to help them balance work and family. The government needs to strengthen its management and oversight of extra cost of daycare use.