The mismatch between employment and child care in Italy: the impact of rationing

In Italy the women's participation is among the lowest in Europe. The female employment rate stands almost 13 percentage points below the EU average and 22 below the Lisbon target. One of the most important reasons is related to the characteristics of child care system. We analyze the characteristics of the child care system in Italy and its relationship to the labor market participation decision of mothers. The two decisions are jointly considered in a discrete choice framework, which also allows for simple forms of rationing. We go on to estimate a bivariate probit model of the child care and employment decisions and find evidence that rationing is an important factor in interpreting price effects on utilization rates and employment decisions.