In May 2015, then-Prime Minister David Cameron announced that he would bring forward a Childcare Bill enabling working parents in England to benefit from 30 hours of free childcare per week for 3- and 4-year-olds. Prior to this announcement, only 15 hours of free childcare was provided to these parents.
• Use economic theory to explain how a working mother of a 3-4 year old child might respond to this policy change when deciding on how many hours to work per week. Include an appropriate diagram or diagrams. [70 marks]
• Assume that several years have passed since this childcare policy was implemented. The UK Government now wants to evaluate its impact on maternal labour supply. A colleague has suggested performing an econometric analysis using a difference-in-differences model. Explain how you would carry out this analysis to answer the Government’s question. Assess the strengths and weaknesses of your approach. [30 marks]
Your essay should be 1000 words excluding diagrams and bibliography (i.e. these don’t count towards the total word count). +/- 10% on the word count is OK, but answers outside this range will be marked down. You must state the word count. The deadline for submission – via the module Turnitin page – is Friday 1st November (week 6). Late submission will attract the usual penalties.
Better to use notes provided, needs to mention income effect and substitution effect and difference-in-difference
