Preschool Availability and Employment: Evidence

from Indonesia

daniel halim, hillary c. johnson, and elizaveta perova

World Bank

I. Introduction
Women’s economic empowerment requires improvement in access to more
and better jobs. Numerous studies show that the provision of childcare has the
potential to advance the first aspect—increase access to jobs. To date, causal evi-
dence of positive impacts of childcare provision on maternal labor force par-
ticipation and employment is available for several developed and developing
countries.1 Only a few exceptions do not find statistically significant impacts

We thank Ririn Purnamasari, Jonathan Lain, Daim Syukriyah, Richard Akresh, Elizabeth Powers,
Marieke Kleemans, Adam Osman, David Jaume, Markus Goldstein, Kathleen Beegle, and the sem-
inar participants at the North East Universities Development Consortium at Tufts University, the
National Team for the Acceleration of Poverty Reduction, the Institute of Labor Economics/World
Bank/Network on Jobs and Development/United Nations University World Institute for Develop-
ment Economics Research Jobs and Development Conference, and the National Bureau of Economic
Research Summer Institute for many helpful discussions and suggestions. We also thank Joseph
Marshan for excellent research assistance. All errors remain our own. This work was supported by
the Umbrella Facility for Gender Equality (UFGE) in partnership with the Australian Department
of Foreign Affairs and Trade. The UFGE has received generous contributions from Australia, Canada,
Denmark, Finland, Germany, Iceland, Ireland, the Netherlands, Norway, Spain, Sweden, Switzerland,
the United Kingdom, the United States, the Bill and Melinda Gates Foundation, and the Wellspring
Philanthropic Fund. The findings, interpretations, and conclusions expressed in this report do not nec-
essarily reflect the views of the board of executive directors of the World Bank or the governments they
represent. Declaration of interest: none. Data are provided through Dataverse at https://doi.org/10
.7910/DVN/CDEGN7. Contact the corresponding author, Daniel Halim, at [email protected].
1
These countries include Argentina (Berlinski and Galiani 2007; Berlinski, Galiani, and McEwan
2011), Brazil (Paes de Barros et al. 2011), Canada (Baker, Gruber, and Milligan 2008; Lefebvre
and Merrigan 2008; Lefebvre, Merrigan, and Verstraete 2009; Brodeur and Connolly 2013), Chile
(Berthelon, Kruger, and Oyarzún 2015; Contreras and Sepulveda 2017; Martínez and Perticará
2017), France (Goux and Maurin 2010), Germany (Bauernschuster and Schlotter 2015; Müller
and Wrohlich 2020), India ( Jain 2016), Israel (Schlosser 2011), Italy (Carta and Rizzica 2018), Kenya
(Clark et al. 2017), Mexico (Ángeles et al. 2011; Calderon 2014; Padilla-Romo and Cabrera-
Hernández 2018), the Netherlands (Bettendorf, Jongen, and Muller 2015), Norway (Andresen
and Havnes 2019), Spain (Nollenberger and Rodriguez 2015), Switzerland (Felfe, Lechner, and
Thiemann 2016), and the United States (Gelbach 2002; Cascio 2009; Barua 2014; Herbst 2017;
Garcia et al. 2020).
Electronically published August 5, 2022

Economic Development and Cultural Change, volume 71, number 1, October 2022.
© 2022 The University of Chicago. All rights reserved. Published by The University of Chicago Press.
https://doi.org/10.1086/714439
40 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE

of expansion of childcare services.2 Relatively high FLFP before childcare ex-

pansion may explain zero impacts in these countries. Indeed, Akgunduz and
Plantenga (2017), aggregating data from 11 countries, demonstrate an inverse
U-shaped relationship between the elasticity of labor force participation and
childcare prices, with childcare subsidies less effective in countries with very low
and/or very high FLFP.
However, empirical evidence is thinner on the potential of childcare to bol-
ster women’s access to better jobs (Menon and Rodgers 2018). Job quality is
multidimensional and can include earnings, labor market security, and quality
of the working environment (Cazes, Hijzen, and Saint-Martin 2015). Several
studies from developed countries examine the impacts of childcare on women’s
earnings and find positive impacts (Herbst [2017] and García et al. [2020] in the
United States; Andresen and Havnes [2019] in Norway; Lefebvre and Merrigan
[2008] in Canada). However, the labor market structures in developed and de-
veloping countries are substantially different. In developed countries where in-
formal and unpaid family work are rarer, higher FLFP and employment are likely
closely associated with an increase in other welfare characteristics, such as earn-
ings and income. In contexts with higher levels of job informality and unpaid
family work, increased labor force participation may or may not translate into im-
proved earnings.
Indeed, the few available studies from developing countries show mixed re-
sults of childcare on indicators related to job quality. Clark et al. (2017) and
Martínez and Perticará (2017) find that access to childcare services did not
trigger an increase in incomes in Kenya and Chile, respectively. Two studies
in Mexico and in Vietnam, on the contrary, suggest improvements in the qual-
ity of labor force participation. Calderon (2014) in Mexico shows that access to
childcare increased the likelihood of working in the formal sector and reduced
the likelihood of earning zero income. Dang, Hiraga, and Nguyen (2019) in
Vietnam find positive impacts of the availability of childcare on working in a
wage job, formality of employment, annual wages, and household income.
In this paper, we evaluate the impact of preschool availability in Indonesia on
women’s labor force participation and the characteristics of their employment:

2
Exceptions are Fitzpatrick (2010) in the case of universal enrollment in kindergarten in the United
States and Havnes and Mogstad (2011) in the case of expansion of subsidized childcare in Norway.
Dang, Hiraga, and Nguyen (2019) do not find impacts of childcare on women’s labor force partic-
ipation in Vietnam but do find impacts on the type of work women do. Lundin, Mörk, and Öckert
(2008) estimate the effects of reduction in childcare prices to be close to zero in Sweden. Haeck,
Lefebvre, and Merrigan (2015) find expansion of preschool to be ineffective in increasing female la-
bor force participation (FLFP) in Canada unless combined with subsidized childcare.
 Halim, Johnson, and Perova 41

type of work, work hours, and earnings. As the placement of preschools is likely
correlated with FLFP, we use a difference-in-difference-in-differences (“triple-
differences”) strategy to establish the causal impact of preschools on maternal
employment—exploiting variations in preschool availability across regions
and over time and the exogenous overlap with the timing when individual
mothers have a preschool-aged child. We find that an additional preschool
per 1,000 children in the district increases the likelihood of maternal employ-
ment by 4.8 percentage points, or 9.1%. However, we find that this increase in
employment is driven by women entering unpaid family work.3 Aligned with
this finding, we do not observe any impacts of preschool access on women’s
earnings or hours worked.
Our contribution to the literature is twofold. First, our paper is one of the
first few examining the impacts of expanding access to childcare on employ-
ment quality outcomes, such as earnings and type of employment, in a devel-
oping country context. Notably, existing studies analyze childcare services that
are offered for a full (or almost full) workday. In Vietnam, Dang, Hiraga, and
Nguyen (2019) analyze childcare services available 5 days a week from 7:30 a.m.
to 4:30 p.m. at least, which are sometimes open on Saturdays and may work
longer hours (Dang, Hiraga, and Nguyen 2019). In Mexico, estancias infantiles
(analyzed in Calderon 2014) are open for 8 hours a day, 5 days a week. The
Kenyan childcare centers studied in Clark et al. (2017) were open for approx-
imately 7.5 hours per day. Martínez and Perticará (2017) study the impacts
of expansion of a full school day by a 3-hour after-primary-school program
(from 4 to 7 p.m.) in Chile. Our study adds to this growing and inconclusive
body of evidence by studying a different modality of childcare services that is
much shorter in duration—3 hours per day as opposed to a full workday. We
also explore the type of work that women enter, which can contextualize the
impacts on their earnings. To the best of our knowledge, only one other study
(Dang, Hiraga, and Nguyen 2019) explores the impacts of childcare access on
the type of work (wage work, self-employment, etc.).
Second, while there is abundant causal evidence on the impacts of childcare
in Europe and the Americas, there are only two studies in low- and middle-
income countries in Asia: Vietnam (Dang, Hiraga, and Nguyen 2019) and In-
dia (Jain 2016). Thus, we expand evidence to a relatively understudied region,
where context may introduce nuances to the relationship between childcare
services and women’s labor market engagement. Indonesia is an emerging
economy with robust and sustained economic growth, with an average of more

3
Unpaid family work is typically classified as employment in household surveys and generally implies
working in family farms or businesses. It is different from unpaid care work.
42 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE

than 5% annual GDP growth over the past 40 years, despite experiencing a
tumultuous economic crisis in 1997/98. Over the same time, the total fertility
rate almost halved, from 4.6 in 1979 to 2.3 in 2018. Despite this positive back-
drop, FLFP in Indonesia has been persistently stagnant (Schaner and Das 2016),
remaining at 54% in 2019 (World Bank 2021). Moreover, preschool atten-
dance is low, and large kin networks have traditionally provided informal
childcare services.
The rest of the paper is organized as follows: in section II, we elaborate on
the context of preschools in Indonesia. In sections III and IV, we discuss our
data and empirical strategy, respectively. We discuss our results in section V,
and section VI concludes the paper.

II. Preschools in Indonesia

There are various forms of early-childhood education and development
(ECED) services in Indonesia. This paper focuses on preschools (Taman
Kanak-Kanak [TK] and Raudhatul Afthal [RA]) owing to data availability.4
Preschools are nonmandatory, formal ECED establishments intended for chil-
dren between the ages of 4 and 6. They offer academic preparation for primary
education. Preschools typically operate daily (five or six times per week) for
3 hours per day. Government regulation stipulates that a preschool should have
at most 20 students per teacher; however, this restriction is frequently ignored,
and quality varies across regions and facilities (Brinkman et al. 2017).
Recognizing the importance of ECED, the government of Indonesia adopted
it into the national education system in 2003.5 This key legislation has allowed
the continued expansion of preschools since 2003. To improve the standard of
education in Indonesia, in 2005 the government issued a policy stipulating a
minimum allocation of 20% of the annual national and regional budget to ed-
ucation expenses. The adoption of ECED into the national education system
provided the legal foundation for ECED to be considered in the national and
regional education budget allocation. In this paper, we focus on public pre-
schools due to the endogenous placement of private preschools, and for simplic-
ity we refer to them as simply preschools.6 Figure 1A shows geographical vari-
ation in preschool availably in 2014. Figure 1B shows an upward trend in
preschool access from 1990 to 2014, notably since the passing of the National

4
Both TK and RA facilities are preprimary education, with the distinction that RA’s curriculum puts
more emphasis on Islamic teachings, moral education, and memorization of the Koran.
5
The Ministry of National Development Planning of the Republic of Indonesia regularly outlines
5-year development plans. The importance of ECED to the government is also reflected in the 5-year
plan of 2004–9 envisioning an increase in ECED enrollment.
6
Estimations that show endogenous placement of private preschools are available upon request.
 Halim, Johnson, and Perova 43

Figure 1. Spatial and temporal distributions of preschools in Indonesia. The number of public preschools is ob-
tained from PODES, and the population of children aged 3–6 is obtained from SUSENAS. Preschool density is de-
fined as the number of preschools per 1,000 children aged 3–6. In A, the key indicates the range and distribution of
public preschool densities across the Indonesian archipelago. Numbers in parentheses refer to the number of dis-
tricts falling in that range. In B, public preschool densities over time across 290 districts, as they existed in 1993, are
shown with circles. Triangles indicate the average density of preschools across 290 districts per year. The total num-
ber of districts (290) reflects their existence in 1993. Districts often split over time; by March 2016, there were
511 districts. In our analyses, we maintain the 1993 district boundaries to allow comparisons over time.

Education System Act (NSEA) in 2003. In the next section, we elaborate how
we exploit spatial and temporal variations in preschool access to estimate their
impact on maternal labor market decisions.

III. Data
We draw information on maternal employment and job characteristics from
the Indonesia Family Life Survey (IFLS). The IFLS is a longitudinal household
survey, first conducted in 1993, with subsequent tracking of the original and
split households in 1997, 2000, 2007, and 2014. It was first fielded in 13
(of 27) provinces back in 1993, which represented 83% of the national pop-
ulation (Frankenberg et al. 1995).7 It has notably high recontact rates, with

7
At the time, Timor-Leste, now an independent country, was one of the Indonesian provinces.
44 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE

87.8% of households surveyed in 1993 being successfully tracked or confirmed

dead in 2014 (Strauss, Witoelar, and Sikoki 2016).
In the first round, more than 14,000 individual respondents were selected to
provide detailed information on their labor force participation, including em-
ployment type, sector, occupation, and income. Target respondents expanded
further in subsequent rounds.8 By the fifth round in 2014, more than 34,000 in-
dividuals were interviewed in detail. In addition to the current employment
module, individuals were also asked to provide information on their employ-
ment status in survey gap years (every year between the previous and current
round of the IFLS). Combining current and historical data, we can construct
an annual employment history from 1988 to 2014 for individuals who were
successfully tracked in all five waves.
The IFLS also includes a module for ever-married women aged 15–49,
which contains detailed questions about all pregnancies. In the first round, close
to 5,000 women were interviewed. Tracking the same women over time al-
lowed us to add in subsequent pregnancies that occurred after the first wave.
For each live birth, respondents were interviewed about the year of (or age at)
childbirth. We can therefore complement our annual employment data with
information on children’s age at each year and thus their preschool eligibility.
We limit the panel to women aged 15–45, and to implement the fixed effect
model discussed in section VI, we further restricted our sample to women
who appear in the data in at least two waves.9 In the remaining text, we refer
to this as our “constructed panel.”
We define preschool access as the number of preschools per 1,000 preschool-
aged children (aged 3–6) in each district (henceforth, “preschool density”). We
use Village Potential Statistics (PODES) cross sections from 1990 to 2014 to ob-
tain the number of preschools. PODES is fielded roughly once every 3 years.10
The population of preschool-aged children comes from the annual National So-
cioeconomic Survey (SUSENAS) cross sections of respective PODES years.11
Following decentralization reform in 1999, regional governments have been
entrusted with more policy-making decisions. Province-, district-, and village-
level governments have legislative power to make policies and allocate public

8
For more details, see Frankenberg and Thomas (2000) and Strauss et al. (2004, 2009).
9
For each individual mother, we need at least two observations. Some of our outcomes, such as hours
worked or earnings, are not available in the historical employment module. Hence, we need individ-
uals who are observed in at least two rounds.
10
Specifically, between 1990 and 2014, PODES was administered in 1990, 1993, 1996, 2000, 2003,
2005, 2008, 2011, and 2014.
11
SUSENAS are sometimes fielded more than once per year. In such cases, we use the round with the
largest sample.
 Halim, Johnson, and Perova 45

goods—in this case, pertaining to preschool access.12 We aggregate preschool

access at the district level because district is the smallest policy-relevant geo-
graphical boundary available in the SUSENAS data. Since decentralization,
districts have also frequently split over time. In 1993, there were 290 districts;
by 2014, there were 511 districts. To ensure equal comparisons across time,
we harmonize district boundaries as they existed in 1993.
PODES is not available annually. We infer preschool data from in between
PODES years using the closest upper year available. For instance, year 1992 is
sandwiched between PODES 1990 and 1993, so we infer preschool data from
the 1993 round.13 We carry out two alternative strategies—restricting our con-
structed panel to PODES years and predicting preschool density for the miss-
ing years using linear projection with the closest two data points available—as
robustness checks.
Appendix table 1 (available online) provides summary statistics from our
constructed panel. We have 186,877 female-year observations, with an average
age of 29.91 and a 36% probability of having a preschool-aged child in any
year. The women in our panel have a 53% work participation rate, and 51%
live in urban areas. They live in districts where only one public preschool is avail-
able for approximately 6,600 children aged 3–6.
There are 10,340 distinct women, who are surveyed on average in
3.54 rounds. We have recall data for them for 18 years on average, approxi-
mately six of which are covered in PODES.14 The average age of first marriage
and first birth are 20.23 and 22.13, respectively. On average, each mother has
2.74 children and 7.75 years of education, or the equivalent of halfway through
lower secondary education. There are multiple observations of preschool access
per district, ideally equal to the multiple of nine PODES rounds between 1990
and 2014; however, some districts in West Sumatra province are not included
in the 2011 PODES and SUSENAS because probability sampling does not al-
ways cover all the districts. Ultimately, there are 2,559 district-year observa-
tions of preschool access, with an average of 0.24 preschool density.

IV. Empirical Strategy

To identify the impact of preschool availability on maternal labor market de-
cisions, we exploit the exogenous overlap in children’s eligibility for preschools

12
Subdistrict is an administrative level between district and village. It serves to demarcate geographic
boundaries, but it does not have any legislative power.
13
In other instances, years 1988–90 of a constructed panel are matched to 1990 PODES, years
1991–93 to 1993 PODES, and years 2012–15 to 2014 PODES.
14
IFLS surveys span over 21 years. However, the employment history, which extends as far back as
1988, allows a maximum of 27 years of observations between 1988 and 2015.
46 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE

with the spatial and temporal variations in preschool access. Specifically, we use
a triple-differences setup and estimate

yijt 5 a 1 bTK jt
Eligible ijt 1 gTKjt 1 dEligible ijt (1)

(1)
1 mj 1 ft 1 wX ijt 1 εijt ,
where yijt represents the employment outcome of female i in district j in year t,
TKjt represents the number of preschools per 1,000 children in district j in
year t, and Eligibleijt is a dummy indicating whether female i in district j in
year t has any preschool-aged eligible children (ages 3–6).15
Preexisting regional disparities—such as natural resources, local labor mar-
ket, and regional dispositions toward working women—and nationwide year-
specific characteristics—such as the business cycle and changes in attitudes to-
ward working women over time—are accounted for by district and year fixed
effects: mj and ft. The parameter Xijt is a vector of time-variant individual char-
acteristics, including urban residence, female i’s age fixed effect, and the num-
ber of children in three age groups: 0–2, 7–12, and 13–18. We cluster our
standard errors at the district level to account for correlations within districts.
The coefficient interacting preschool density and eligibility, b, is our triple-
differences estimate.
Similar to Brodeur and Connolly (2013) and Herbst (2017), our none-
ligible comparison group is the group of women without any preschool-aged
children, which includes nonmothers and mothers with all children younger
than or older than preschool ages.16 Employment trends of nonmothers may
not be similar to those of mothers with preschool-aged children. However,
the common trend assumption in triple differences requires only that absent
differences in preschool access (be it across regions or over time), the gaps in
labor market outcomes between mothers with preschool-aged children with
higher or lower access to preschools and the gaps between women without
preschool-aged children with higher or lower access to preschools are not sys-
tematically different.

15
While preschools are intended for the ages of 4–6, the entry age is not strictly observed. In our
data, we observe that 6% of preschoolers first entered preschools by the age of 3.
16
Some studies of the effect of childcare on maternal employment have used the age of the youngest
child to define treatment category (e.g., Gelbach 2002; Baker, Gruber, and Milligan 2008; Cascio
2009). We define treatment based on any child in the preschool age because, in Indonesia, the incidence
of first birth has a more substantial negative effect on maternal employment than subsequent births
(Halim, Johnson, and Perova 2017). Moreover, with detailed fertility history, we can infer the ages of
all children born to the mother at any given year, unlike in most cross-sectional data without detailed
fertility history—e.g., Labor Force Survey or census, where we have to define based on the youngest
child because the first child might have moved out of the household and thus is no longer observed.
 Halim, Johnson, and Perova 47

Figure 2. Average work participation of mothers with and without preschool-aged children in districts with high and
low preschool growth. The sample is restricted to females aged 15–45 years old in at least two IFLS rounds. The
sample includes eligible mothers with preschool-aged children (ages 3–6) and noneligible women without any
preschool-aged children in PODES years. Noneligible women include nonmothers and mothers with children outside
of preschool ages. Districts with high preschool growth are defined as districts that at least double the density of
preschools between 2003 and 2014. Median public preschool density growth between 2003 and 2004 is 85%. The
vertical dashed line marks the year 2003, when the NSEA was passed—incorporating ECED into the national ed-
ucation system—which leads to continued expansion of preschools since 2003. Solid lines indicate eligible moth-
ers, and dashed lines indicate noneligible women. Filled symbols indicate high-growth districts, and open symbols
indicate low-growth districts.

We examine the plausibility of the common trend assumption by plotting

the average employment of mothers with and without preschool-aged children
over time across districts that experience high and low growth in preschool den-
sity. We define high-growth districts as districts that more than doubled their
preschool density between 2003 (when the NSEA was passed) and 2014.17 Fig-
ure 2 shows that pretrends in districts with high and low preschool growth
among eligible and noneligible mothers coincide with one another well. Com-
mon trends for noneligible women in high- and low-growth areas persist after
2003, while the average work participation for mothers with preschool-aged
children in high-growth districts is consistently larger than that in low-growth
districts since 2003.

17
The cutoff of 100% growth to indicate high-growth districts is reasonable given that median
growth in public preschool density is 85%. The trends look similar if districts with “high” preschool
investment are instead defined as districts with higher than average or median growth.
48 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE

We also formally test the parallel trends assumption, limiting our sample to
the 1988–2003 period and estimating

yijt 5 a 1 h1 Growthj Post tl Eligible ijt 1 h2 Growthj Post tl 1 h3 Growthj Eligible ijt
(2)
1 h4 Post tl Eligible ijt 1 h5 Eligible ijt 1 mj 1 ft 1 wX ijt 1 εijt ,
(2)
where Growthj captures change in preschool density between 2003 (when the
NSEA was passed) and 2014 and Post tl is a dummy variable equal to one if
year t is greater than year l and zero otherwise. Other terms are defined as in
equation (1). We run equation (2) three times, for l equal to 1993, 1996, and
1999. Table 1 confirms graphical representation in figure 2: coefficients on the
placebo, h2, are not statistically distinguishable from zero and very low in mag-
nitude for all the three placebo cutoffs.
Another potential threat to our identification strategy may be due to a pos-
sibility that women’s fertility decisions may respond to the availability of pre-
schools. We confirm that the composition of eligible and noneligible groups in
our triple-differences framework is not affected by the expansion of preschool

TABLE 1
TEST OF PARALLEL TRENDS BEFORE PRESCHOOL EXPANSION (1988–2002) ON WOMEN’S WORK PARTICIPATION

Placebo Cutoff: Year ≥ . . .

1993 1996 1999

(1) (2) (3)

Preschool growth  after cutoff  eligible child 2.005 2.002 2.003

(.005) (.004) (.005)
Preschool growth  after cutoff 2.003 2.002 2.001
(.004) (.003) (.003)
Preschool growth  eligible child .007 .005 .005
(.005) (.004) (.004)
After cutoff  eligible child 2.033** 2.030** 2.001
(.014) (.013) (.012)
Eligible child 2.018 2.025** 2.042***
(.013) (.011) (.011)
Observations 87,902 87,902 87,902
Mean .469 .469 .469
Note. Sample is restricted to females aged 15–45 years old who appear in at least two IFLS rounds.
We also restrict our sample to the years before preschool expansion (1988–2002). We test the common
trends assumption by running a regression fully interacting three variables: (i) growth in preschool density
within each district, (ii) a dummy for years after the arbitrary placebo cutoff year as indicated in the column
heading, and (iii) a dummy for having a preschool-aged eligible child (ages 3–6). The common trends as-
sumption holds if the null hypothesis holds for the coefficient of “Preschool growth  after cutoff.” All
regressions include district and year fixed effects and the following control variables: number of children
aged 0–2, 7–12, and 13–18, mother’s age dummies, and an urban dummy. Robust standard errors, clus-
tered at the district level, are shown in parentheses.
** Significant at the 5% level.
*** Significant at the 1% level.
 Halim, Johnson, and Perova 49
TABLE 2
PRESCHOOL AVAILABILITY ON THE LIKELIHOOD OF HAVING A PRESCHOOL-AGED CHILD

Has a Child Aged 3–6

(1) (2)

Preschool density  eligible child 2.012

(.011)
(Lagged) preschool density  eligible child 2.017
(.012)
Observations 185,906 174,482
Mean .358 .367
Note. Sample is restricted to females aged 15–45 years old who appear in at least two IFLS rounds. We
test the validity of our triple-differences specification by regressing the dummy for having a preschool-
aged child (ages 3–6) on the contemporaneous or lagged preschool density. All regressions include
district and year fixed effects and the following control variables: number of children aged 0–2, 7–12,
and 13–18, mother’s age dummies, and an urban dummy. Robust standard errors, clustered at district
level, are shown in parentheses.

services by regressing a dummy for having a preschool-aged child on preschool

density.18 Table 2 shows that preschool availability is not correlated with the
likelihood of having a preschool-aged child.
Last, to confirm the validity of our identification strategy we check whether
mothers with preschool-aged children sort into districts with high preschool
access. We aggregate our constructed panel of individuals to a panel of district-
years.19 We explore whether districts with higher preschool access induce a
net migration of preschool-aged eligible mothers. Specifically, we regress the
change in net migration of eligible mothers on either the change or the lagged
change of preschool density in the district. Table 3 reports our findings. We
do not find any evidence of sorting for better preschool access.

V. Results
A. Main Results
We begin by examining the extensive margin of labor market engagement: em-
ployment. Do preschools serve as an adequate alternative to parental childcare,
enabling women to join the labor market? Table 4 shows that an additional pre-
school per 1,000 children increases work participation of eligible mothers by
4.8 percentage points relative to noneligible women, and this result is robust
to adjustments for multiple hypothesis testing. The adjusted q-value using

18
It includes other terms—district and year fixed effects and time-variant individual characteristics—
as defined in eq. (1).
19
By construction, one PODES year is matched to several years in the panel of mothers. For in-
stance, PODES 1993 is assigned to years 1991–93 in the panel of mothers. If the time unit is defined
annually, we obtain (mechanically) zero change in preschool density in district j between 1993 and
1992. For the purpose of this test, we restrict our analysis to PODES years and collapse our individual-
level panel of mothers to the district level.
50 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE

TABLE 3
PRESCHOOL AVAILABILITY ON NET MIGRATION OF MOTHERS WITH A PRESCHOOL-AGED CHILD

Net Migration of Mothers with a Preschool-Aged Child

(1) (2)

Net change in public preschool density 2.383

(.638)
(Lagged) net change in public preschool density .245
(.426)
Observations 1,706 1,705
Mean .002 2.001
Mean of net change in preschool density 2.002 .000
Note. Sample is composed of a panel of districts over PODES survey years. We aggregate the number of
preschool-aged eligible mothers in our constructed panel and regress the net migration of mothers with a
preschool-aged child between PODES survey years on the contemporaneous or lagged net change in pre-
school densities. All regressions include district and year fixed effects and the following control variables:
number of children aged 0–2, 7–12, and 13–18, mother’s age dummies, and an urban dummy. Robust
standard errors, clustered at district level, are shown in parentheses.

the Benjamini-Hochberg (1995) step-up method to control for the false dis-
covery rate (FDR) is .028.20 Preschool availability induces a sizable increase
in the labor force participation of women with preschool-aged children: the
4.8 percentage point change represents a 9.1% increase from the average of
53% of women in our sample participating in the workforce. Preschool density
in itself has no statistically significant effect on noneligible mothers. Expectedly,
having a young preschool-aged child has a negative effect on women’s work par-
ticipation. Notably, the negative effect of having a preschooler is almost com-
pensated by having another public preschool per 1,000 children.
Having established the impact of preschool on the likelihood of maternal
work, we now turn to exploring the quality of this work. We first examine
the impact on work status. Table 4 also presents the results of regression (1)
on having a side job and being self-employed, a government employee, an em-
ployee in a private company, or an unpaid family worker. An additional pre-
school per 1,000 children increases the likelihood that preschooler mothers be-
come unpaid family workers by 3.6 percentage points, which is significant and
robust to the simultaneous inference correction (q-value of .028). Entry into
unpaid family work accounts for 75% of the gains in women’s labor force par-
ticipation. Aligned with this finding, we do not find statistically significant im-
pacts on women’s earnings or hours worked (table 5). Preschools in Indonesia
are open for 3 hours per day on average. This time window is not sufficient to
secure a wage job or to successfully open a business. Unpaid family work ap-
pears to be the only feasible option given such short relief from childcare duties.

20
A regular p-value of .05 suggests that 5% of all tests result in false positives. An FDR-adjusted q-
value of .05 instead suggests that 5% of significant tests result in false positives.
 Halim, Johnson, and Perova 51
TABLE 4
EFFECTS OF PRESCHOOL AVAILABILITY ON WOMEN’S EMPLOYMENT

Employment Types
Has a
Work Second Self- Government Private Unpaid Family
Participation Job Employed Worker Worker Worker
(1) (2) (3) (4) (5) (6)

Preschool density  eligible .048*** 2.005 .000 2.002 .014 .036***

(.017) (.010) (.012) (.009) (.012) (.013)
Preschool density 2.015 2.011 .012 .003 2.031** .000
(.016) (.008) (.008) (.007) (.013) (.011)
Eligible child 2.062*** .001 .004 2.005** 2.075*** .013***
(.008) (.003) (.004) (.002) (.006) (.004)
Observations 185,906 185,536 185,906 185,906 185,906 185,906
Mean .525 .073 .160 .037 .201 .126
FDR q-value of preschool
density  eligible .028 .987 .987 .987 .987 .028
Note. Sample is restricted to females aged 15–45 years old who appear in at least two IFLS rounds. The
table reports coefficients of the triple-differences specification estimated in eq. (1) on outcomes indicated
in the column headings. All regressions include district and year fixed effects and the following control
variables: number of children aged 0–2, 7–12, and 13–18, mother’s age dummies, and an urban dummy.
Robust standard errors, clustered at district level, are shown in parentheses. FDR-adjusted q-values, com-
puted over all six outcomes, are shown for the coefficient of interest interacting “Preschool density  el-
igible.” FDR q-values indicate the probability of false positives among significant tests.
** Significant at the 5% level.
*** Significant at the 1% level.

B. Robustness Checks
We test the robustness of our results to two alternative specifications: triple dif-
ferences with individual fixed effects and an event study. Estimating the impact
of preschool availability in a triple-differences fixed effects framework allows us
to account for women’s unobserved preferences for work and leisure, abilities,
fertilities, and fecundities, which may simultaneously affect child-rearing and
labor market decisions. Given that inclusion of individual fixed effects enables
us to control for only time-invariant characteristics, this identification strategy
requires that we assume that fertility, career, and family preferences do not
change over time, which may be a strong assumption.
We estimate

yijt 5 a 1 bTK jt
Eligible ijt 1 gTK jt 1 dEligible ijt 1 mj (3)

(3)
1 ft 1 vi 1 wX ijt 1 εijt ,
where vi represents an individual fixed effect and the remainder of the notation
remains the same as in equation (1). Identification relies on within-mothers
comparisons, exploiting two sources of variation: age eligibility (we compare
a mother’s work participation when her child is aged 2 and not eligible for pre-
school and the next year when her child is aged 3 and eligible) and preschool
52 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE

TABLE 5
EFFECTS OF PRESCHOOL AVAILABILITY ON WOMEN’S EARNINGS AND WORK HOURS

Salary Net Profit Income Work Hours

(1) (2) (3) (4)

Preschool density  eligible .040 .117 .051 2.031

(.119) (.135) (.094) (.039)
Preschool density 2.107 2.297* 2.194 2.021
(.156) (.169) (.125) (.035)
Eligible child 2.153*** 2.023 2.095*** 2.044***
(.040) (.042) (.032) (.015)
Observations 18,722 15,699 33,947 43,643
Mean 399.79 413.97 410.03 38.18
FDR q-value of preschool density  eligible .736 .736 .736 .736
Note. Sample is restricted to females aged 15–45 years old who appear in at least two IFLS rounds. This
table reports coefficients of the triple-differences specification estimated in eq. (1) on outcomes indicated
in the column headings. Outcomes evaluated in this table are limited to IFLS survey years (without historical
recalls). Salary, net profit, and income are per month and adjusted for inflation using national consumer
price index (CPI) with 2010 base year obtained from Federal Reserve Economic Data (FRED). Income is de-
fined as the sum of salary and net profit. Work hours are per week. We apply log transformation to all de-
pendent variables so that estimates can be interpreted as percentage changes; zero values are imputed
with log(0.1). All regressions include district and year fixed effects and the following control variables: num-
ber of children aged 0–2, 7–12, and 13–18, mother’s age dummies, and an urban dummy. Robust standard
errors, clustered at the district level, are shown in parentheses. FDR-adjusted q-values, computed over all
four outcomes, are shown for the coefficient of interest interacting “Preschool density  eligible.” FDR q-
values indicate the probability of false positives among significant tests. Means are reported in nominal
terms. Salary, net profit, and income are reported in IDR 10,000 increments and are adjusted for inflation
using national CPI with 2010 base year (FRED). The exchange rate in 2010 was US$1 for IDR 9,090 (FRED).
* Significant at the 10% level.
*** Significant at the 1% level.

availability during eligible ages (e.g., preschool density may increase from the
time when the child is aged 3 until the time when the child is aged 4). The re-
sults are very similar to the results from our main specification. We find that
preschool availability increases the likelihood that a mother works by 6.6 per-
centage points, or 12% (tables 6, 7, panel A).
We carry out an event study as our second robustness check. Specifically, we
focus our analysis on mother’s work in the years surrounding her firstborn’s el-
igibility to enter preschool and estimate
1 18 1
Yijt 5 a 1 o b TK
a526
a jt
1ðage it 5 aÞ 1 oba TK jt
1ðage it 5 aÞ 1
a53
o d 1ðage
a526
a it 5 aÞ
18 (4)
1 oda 1ðage it 5 aÞ 1 gTK jt 1 mj 1 ft 1 vi 1 wX ijt 1 εijt ,
a53

(4)
where 1ðage it 5 aÞ is an indicator variable equal to one if the firstborn of
mother i is aged a in year t. The coefficients ba and da are estimated for each
year of age and capture the impact of preschool on work participation relative
to the omitted group of mothers whose first child was 2 years old, 1 year before
becoming eligible for preschool. All other terms are defined as in equation (1).
 Halim, Johnson, and Perova 53
TABLE 6
ROBUSTNESS CHECKS ON THE EFFECTS OF PRESCHOOL AVAILABILITY ON WOMEN’S EMPLOYMENT

Employment Types
Has a
Work Second Self- Government Private Unpaid Family
Participation Job Employed Worker Worker Worker
(1) (2) (3) (4) (5) (6)

A. With Individual Fixed Effects

Preschool density 
eligible .066*** .002 .007 .011*** .018* .030***
(.017) (.010) (.011) (.004) (.011) (.011)
[.028] [.987] [.987] [.987] [.987] [.028]
Observations 185,906 185,536 185,906 185,906 185,906 185,906
Mean .525 .073 .160 .037 .201 .126

B. With Linear Projection of Preschool Density

Preschool density 
eligible .051** 2.001 2.004 2.003 .016 .043***
(.021) (.010) (.013) (.009) (.013) (.014)
[.065] [.894] [.894] [.894] [.877] [.014]
Observations 186,857 186,478 186,857 186,857 186,857 186,857
Mean .525 .073 .160 .037 .201 .127

C. Restricted to PODES Years Only

Preschool density 
eligible .040* .003 2.018 .001 .017 .041**
(.022) (.012) (.014) (.009) (.015) (.017)
[.324] [.909] [.774] [.909] [.796] [.086]
Observations 62,883 62,626 62,883 62,883 62,883 62,883
Mean .534 .080 .163 .037 .205 .129
Note. Sample is restricted to females aged 15–45 years old who appear in at least two IFLS rounds. This
table reports coefficients of the triple-differences specification estimated in eq. (1) on outcomes indicated
in the column headings. Each panel introduces a single deviation from the preferred specification. Panel A
includes individual female’s fixed effects. Panel B replaces the preferred method to impute preschool den-
sity with a linear projection. Panel C is restricted to PODES years only. All regressions include district and
year fixed effects and the following control variables: number of children aged 0–2, 7–12, and 13–18,
mother’s age dummies, and an urban dummy. Robust standard errors, clustered at the district level,
are shown in parentheses. FDR-adjusted q-values, computed over all six outcomes within each panel,
are shown in brackets. FDR q-values indicate the probability of false positives among significant tests.
* Significant at the 10% level.
** Significant at the 5% level.
*** Significant at the 1% level.

Figure 3 shows the results, which again are largely consistent with our main
specification. We first note that relative to the year before preschool eligibility,
mothers’ work participation benefits from better public preschool access only
starting from age 5. This is 1 year after the official age of entry into preschools
(age 4) and when the majority of children have already entered preschools.21

21
Information on the first age of entry into preschools is available in IFLS 4 (2007/8) and IFLS 5
(2014/15). There is a stark jump in preschool entries at age 4: 35% and 40% of young children ever
enrolled in preschools first entered preschool at age 4 in IFLS 4 and 5, respectively.
54 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE

TABLE 7
ROBUSTNESS CHECKS ON THE EFFECTS OF PRESCHOOL AVAILABILITY ON WOMEN’S EARNINGS AND WORK HOURS

Salary Net Profit Income Work Hours

(1) (2) (3) (4)

A. With Individual Fixed Effects

Preschool density  eligible .040 .117 .051 2.031

(.119) (.135) (.094) (.039)
[.627] [.627] [.627] [.627]
Observations 18,722 15,699 33,947 43,643
Mean 399.792 413.968 410.028 38.181

B. With Linear Projection of Preschool Density

Preschool  eligible .034 .164 .109 2.036

(.163) (.142) (.101) (.040)
[.833] [.740] [.740] [.740]
Observations 18,791 15,776 34,092 43,926
Mean 398.963 413.071 409.153 38.190
C. Restricted to PODES Years Only

Preschool  eligible .005 .061 .039 2.072

(.243) (.326) (.193) (.046)
[.985] [.985] [.985] [.482]
Observations 7,573 6,411 13,779 17,897
Mean 392.516 445.806 421.003 37.735
Note. Sample is restricted to females aged 15–45 years old who appear in at least two IFLS rounds. The
table reports coefficients of the triple-differences specification estimated in eq. (1) on outcomes indicated
in the column headings. Each panel introduces a single deviation from the preferred specification. Panel A
includes individual female’s fixed effects. Panel B replaces the preferred method to impute preschool den-
sity with a linear projection. Panel C is restricted to PODES years only. Outcomes evaluated in this table are
limited to IFLS survey years (without historical recalls). Salary, net profit, and income are per month and ad-
justed for inflation using national consumer price index (CPI) with 2010 base year obtained from Federal
Reserve Economic Data (FRED). Income is defined as the sum of salary and net profit. Work hours are
per week. We apply a log transformation to all dependent variables so that estimates can be interpreted
as percentage changes; zero values are imputed with log(0.1). All regressions include district and year fixed
effects and the following control variables: number of children aged 0–2, 7–12, and 13–18, mother’s age
dummies, and an urban dummy. Robust standard errors, clustered at the district level, are shown in paren-
theses. FDR-adjusted q-values, computed over all four outcomes within each panel, are shown in brackets.
FDR q-values indicate the probability of false positives among significant tests. Means are reported in nom-
inal terms. Salary, net profit, and income are reported in IDR 10,000 increments and are adjusted for inflation
using national CPI with 2010 base year (FRED). The exchange rate in 2010 was US$1 for IDR 9,090 (FRED).

The effects increase up to age 7 and decline after that. The effects are no lon-
ger statistically significant from age 10 onward. This either suggests some ev-
idence for the dynamic labor supply effect (Lefebvre, Merrigan, and Verstraete
2009) or that mothers whose firstborn is of age 7 are also likely to have a youn-
ger child who is eligible for preschool.
As discussed in section III, the preschool data obtained from the PODES
are available only in 9 of 28 years in our constructed panel. Our main spec-
ifications infer the number of preschools by using the first PODES observa-
tion available after year t. We test the robustness of our results to two alterna-
tive approaches. First, we test a conservative approach that restricts the analysis
 Halim, Johnson, and Perova 55

Figure 3. Event study on the effect of preschools on mothers’ work participation by first child’s age relative to pre-
preschool-age level. The sample is restricted to females aged 15–45 years old who appear in at least two IFLS
rounds. We infer preschool data in between PODES years. Each circle represents the interaction coefficient of pre-
school density in one’s district of residence and first child’s age. Mothers’ work participations are averaged at the
tails; six or more years before the first childbirth and when the first child was 18 or older. Treatment effects are in-
terpreted relative to the omitted group of mothers whose first child was 2 years old, 1 year before becoming eli-
gible for preschool. Spikes represent 95% confidence intervals (CI).

to PODES years only. Second, we fit a linear projection between nonmissing

PODES years. Panels B and C of tables 6 and 7 show that our main results are
robust to these alternative definitions of preschool density.

C. Welfare Analysis
Increasing women’s labor market engagement is an important policy objective
in Indonesia. Increased FLFP is likely to slow down rising inequality (Cancian
and Reed 1998), may help households better insure against risk (Blundell,
Pistaferri, and Saporta-Eksten 2016; Ellieroth 2019), and has been shown to
be more effective in countering the problem of an aging population than in-
creased migration or delayed retirement (World Bank 2016a).22
How effective is provision of preschools in achieving this objective? Our es-
timates show that building one additional preschool per 1,000 children in a
district is likely to bring 23 mothers from that district into the workforce. Given
that they are most likely to enter the labor market as unpaid family workers and
we cannot observe their wages, we estimate the value of their work at a predicted
market wage rate for individuals with comparable observable characteristics.

22
World Bank (2016b) registers an increase in inequality in Indonesia over the last decade.
56 ECONOMIC DEVELOPMENT AND CULTURAL CHANGE

Specifically, we regress log hourly earnings as a function of education, experi-

ence, and ability, proxied using the score on Raven’s Progressive Matrices, as well
as their squared values, controlling for urban residency and including district
fixed effects for 2014, the latest year in our data. We use the estimated coeffi-
cients to construct the hypothetical average hourly wage for unpaid family work-
ers: IDR 1,781, which is approximately 18% of paid workers’ average hourly
wage of IDR 10,031.23 To estimate the annual increase in household welfare
due to the construction of one preschool, we assume that women who join
the labor force work only during the hours of preschool operation. With pre-
schools operating for 3 hours a day and 5 days a week, one mother would par-
ticipate in productive work for 780 hours per year (15  52 5 780). Using the
estimated shadow wage rate for unpaid family workers, one additional public
preschool would generate IDR 31,951,140 per year in improved household
welfare (23  1,781  780 5 31,951,140).24
As unpaid family work is not taxable, we can think about the estimated in-
crease in shadow earnings as a transfer to households. At approximately IDR
1,389,180 per woman per year, it falls in the ballpark of the benefits of the gov-
ernment’s flagship cash transfer program, Program Keluarga Harapan (PKH),
whose beneficiaries receive between IDR 600,000 (US$67) and IDR 2.2 mil-
lion (US$247) annually depending on family composition (Alatas et al. 2016).

VI. Discussion
Aligned with previous studies, our study shows that preschool availability—
one type of childcare—increases women’s labor force participation in Indone-
sia. An additional public preschool per 1,000 children in the district increases
the labor force participation of mothers of preschool-aged children by 4.8 per-
centage points, which represents a 9.1% increase over average labor force par-
ticipation. However, likely due the fact that preschools are open for only 3 hours
per day, preschool expansion does not systematically enable women to access
better jobs. Three-quarters of mothers with preschooler-aged children who en-
ter the labor force go into unpaid family work, which may be more amenable
to the limited provision of childcare. Not surprisingly, we do not find impacts
on women’s earnings or work hours. To enable women to access better jobs, ex-
tended preschool hours or aftercare services may be needed. For example, in
Dang, Hiraga, and Nguyen (2019), full-day childcare services enabled women
in Vietnam to switch from self-employment to wage employment and formal
jobs and also increase their earnings.

23
US$0.44 and US$2.48 in purchasing power parity (PPP)–adjusted 2014 US dollars.
24
US$7,895 in PPP-adjusted 2014 US dollars.
 Halim, Johnson, and Perova 57

Although a different type of childcare service may be more effective in pro-

moting women’s access to more and better jobs, expanding preschools that op-
erate for only 3 hours a day can also have some welfare-improving impacts for
Indonesian women and families. Even if mothers with preschooler-aged children
who enter unpaid family work do not directly receive income from their con-
tributions to family farms or businesses, their labor contributions presumably
increase the productivity of these enterprises, which can enhance household
welfare. Using an estimated shadow wage for unpaid family workers, we find
that a mother with preschooler-aged children who enters unpaid family work
only during the hours of preschool operation could generate approximately
IDR 1,389,180. This increase in welfare is on par with the Indonesian govern-
ment’s flagship cash transfer program, PKH, suggesting that preschool expan-
sion can be an attractive policy option for boosting household welfare.
While our welfare analysis is limited in scope, an increase in FLFP has other
benefits for the overall economy, including counteracting the negative impacts
of aging and the shrinking workforce (World Bank 2016a). Cameron, Con-
treras Suarez, and Rowell (2019) noted that Indonesia could increase GDP
by US$123 billion by increasing its FLFP to the G20 goal of 58.5% by
2025. The success of childcare provision in increasing maternal labor supply
offers a glimmer of hope amid stalled improvement in Indonesia’s FLFP during
decades of high economic growth. Gradually changing attitudes toward women
working, especially in urban settings of Indonesia (Cameron, Contreras Suarez,
and Rowell 2019), indicate an opportune timing for policy makers to address
childcare constraints facing women in accessing more and better jobs.

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