The matter had been in dispute with earlier Australian studies finding the relationship between the cost of childcare and women'as willingness to work not "significantly different from zero".
But in a paper published this morning economists from the Treasury's tax analysis division find a much bigger effect using detailed data on the cost of childcare and the likelihood of women working suburb by suburb, rather than state by state as has been done in the past.
They find where the hourly cost of childcare before rebates and benefits is 10 per cent higher the likelihood of a mother working at all is 3 per cent lower... As well, where the cost of childcare is 10 per cent higher the total number of hours worked by mothers will be 7 per cent less.
The results suggest childcare rivals in importance other measures examined by the Henry Review as a means of encouraging women to work including tax and the design of benefits.
Economists Xiaodong Gong, Anthony King and Robert Breunig also find that the quality and availability of childcare matters, using a survey that asks about perceptions of local childcare to find that the better the perception the more likely is a mother to work longer hours and to work full-time rather than part-time.
Published in today's SMH and Age
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