Child-Care Choices by Working Mothers: The Case of Italy

In spite of relatively generous public subsidies and a reputation for high quality, only a very limited proportion of Italian families use public child-care and a large proportion use informal care. In this paper, we attempt to explore the determinants of the use of child-care among dual workers families. Given the limitations of data available we match two different data sets: the Bank of Italy (SHIW) and ISTAT Multiscopo. We find evidence that the availability of public child-care affects in an important way its demand. We also find that increases in costs of public child-care reduce the use of public as well as private indicating a shift to informal child-care. The presence of a grandmother who lives near and is in good health is an important explanation of the choice especially in presence of very small children. An understanding of the importance of these factors is relevant in the evaluation of child-care policies. This is particularly important in Italy, where the majority of families with children have only one child and children would benefit also from the socialization aspects of the child-care system. We would like to thank Christopher Flinn, Massimiliano Bratti, and Maria Concetta Chiuri for helpful comments, Donald Rubin for useful hints on the matching procedure, and participants at the ESPE meeting in New York 2003, the EALE meeting in Lisbon 2004. This research was partially supported by the EC Grant and the Compagnia di San Paolo.