Has improved daycare accessibility increased Japan's maternal employment rate? Municipal evidence from 2000-2010

•We study daycare access effects on employment of mothers with young children in Japan.•We analyze newly constructed municipality-level data for 2000, 2005, and 2010.•The results suggest that better daycare accessibility causes 5%−11% of the rise in maternal employment.•We also find evidence that an expansion of licensed daycare centers crowds out kindergartens.

Over the past decades, female labor force participation in Japan has continued to expand, accompanied by an improvement in daycare accessibility. This paper quantifies the daycare effects on employment of mothers with preschool children, analyzing newly constructed municipality-level data covering 1758 municipalities for 2000, 2005, and 2010. The results suggest that 5%-11% of the increase in maternal employment rate during 2000-2010 was attributable to the improvement in daycare accessibility. However, the daycare effects on maternal employment are quite limited compared with those on enrollments at licensed daycare centers. Our new evidence suggests that such discrepancy could emanate from the fact that better access to licensed daycare centers encouraged working mothers to switch from kindergartens.