The Impact of Employer-Sponsored Childcare Facilities on Employee Retention: A Fuzzy Regression Discontinuity Approach

The Impact of Employer-Sponsored Childcare Facilities on Employee Retention: A Fuzzy Regression Discontinuity Approach | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article The Impact of Employer-Sponsored Childcare Facilities on Employee Retention: A Fuzzy Regression Discontinuity Approach Md Abdul Bari, Mohammad Osman Gani, Poulami Sarker, Md Khalid Bin Kamal, and 1 more This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8564553/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Firms increasingly recognize that retaining skilled workers is more valuable than continuously replacing them. Employer-sponsored childcare, therefore, serves as a strategic human resource investment aimed at reducing turnover and retaining valuable, trained employees. However, empirical evidence on the impact of employer-sponsored childcare facilities on employee retention remains limited. This study examines the causal effect of employer-provided childcare facilities on employee retention in India using a Fuzzy Regression Discontinuity Design. The analysis leverages the Maternity Benefit (Amendment) Act 2017, which mandates firms with 50 or more employees to provide access to a nearby childcare facility, treating the number of employees in the previous financial year as the running variable. Using data from 1,170 firms, the study measures the average length of employment in the previous financial year as the outcome variable. The results indicate that having employer-sponsored childcare facilities increases the average employment duration by 6.56 months. These findings underscore the significance of employer-sponsored childcare as a valuable policy tool for enhancing employee retention. Grounded in Human Capital Theory (Rees, 1965 ), this study suggests that investing in employees enhances retention. Child Care Employee Retention Causality Strategy Employer-Sponsored Figures Figure 1 Figure 2 1. Introduction Firms are increasingly aware that retaining skilled workers is more valuable than constantly replacing them (Pemer and Werr, 2025 ). According to the International Labour Organization ( 2025 ), women make up less than 47% of the global workforce compared to 72% of men—a striking 25-point gap that rises to more than 50 points in some regions. Even after having a smaller number of women participating in the world, women leave their workplace due to workplace discrimination (Rim et al., 2025 ), gender pay gaps (Zając et al., 2025 ), lack of family support (Valentova et al., 2025 ), limited promotion opportunities (Azmat et al., 2025 ), and unsafe work environment (Mirabito et al., 2025 ). In addition, harassment, unsafe transportation, and inflexible or male-dominated workplace cultures push women to leave jobs prematurely (Asghar and Zulfiqar, 2025 ). In underdeveloped and developing countries, many face pressure due to a lack of maternity benefits (Chaudhary et al., 2025 ). Women leave their jobs after giving birth mostly because of a lack of childcare options (Maj et al., 2025 ). In such circumstances, employer-sponsored childcare becomes a strategic human resource tool rather than a supplementary welfare benefit (von Gleichen, 2025 ). However, the emergence of employer-specific childcare facilities has received relatively little attention in the employee retention literature (Hardy et al., 2024 ; Sexsmith et al., 2024 ). The International Labour Organization ( 2018 ) agrees that childcare scarcity is a structural barrier to women's labour supply. The World Bank ( 2023 ) estimates that India's female labour force participation remains among the lowest in the world, at around 33%. Qualitative research suggests that childcare constraints drive this exit: women frequently face a "forced choice" between paid work and childcare, and childcare scarcity pushes women out of the labour market (Deshpande and Kabeer 2019 ; Chaudhary and Verick, 2014 ; Sarkar et al., 2019 ). These childcare constraints carry greater consequences for Indian firms. According to the Ministry of Micro, Small, and Medium Enterprises (2022), more than 97% of Indian firms are Micro, Small, or Medium Enterprises, accounting for roughly 30% of GDP and nearly half of non-agricultural employment. Because Firms rely on firm-specific tacit knowledge and have lean staffing, the departure of a single experienced employee can disrupt production (Nataraj et al., 2020 ). Smaller businesses also invest less in training due to the high perceived risk of employee turnover (Bloom et al., 2013 ), making employee retention even more crucial. This study examines employer-provided childcare facilities as a policy tool to reduce employee turnover. In organizational studies, it remains unclear whether childcare results in measurable retention gains for firms. The question whether employer sponsored child care facilities impact employee retention is important because firms incur direct and indirect costs when trained employees leave the organization (Mah et al., 2025 ). When an employee leaves, the company loses accumulated tacit knowledge and must devote time and resources to finding and training a replacement (Mahajne et al., 2024). The primary aim of employee retention strategies and practices is twofold: to reduce employee turnover and to minimize the costs associated with recruiting, training, and orienting new employees (Cloutier et al., 2015 ). Human capital theory posits that when trained employees leave, firms experience a loss of productivity because firm-specific skills cannot be easily transferred (Rees, 1965 ). The retention problem is especially acute for women returning from maternity leave, as childcare responsibilities, limited childcare access, and rigid work arrangements increase the likelihood of quitting. Childcare influences both household labor supply decisions and corporate strategic decisions to retain valuable employees. Against this backdrop, the central question guiding this study is: RQ1: Does employer-sponsored childcare have a causal impact on employee retention in firms? More specifically, the study aims to investigate whether firms that cross the legally mandated childcare threshold under India’s Maternity Benefit (Amendment) Act, 2017—requiring establishments with 50 or more employees to provide a crèche—experience higher average employment tenure. By focusing on retention rather than labor force re-entry, this study examines whether childcare benefits translate into measurable firm-level human capital gains. Firms that offer childcare facilities are often systematically different from those that do not, as larger or more resourceful firms are more likely to implement such benefits. Consequently, simple comparisons between firms with and without childcare facilities will lead to biased results due to self-selection. To address this issue, the present study employs a Fuzzy Regression Discontinuity Design (Fuzzy RDD) to estimate the causal impact of workplace childcare facilities on labour retention in the Indian context. The identification strategy exploits the threshold established under the Maternity Benefit (Amendment) Act, 2017, which requires all establishments with 50 or more employees to provide access to a childcare (crèche) facility within a prescribed distance from the workplace (Bala, 2019 ). The number of employees in each firm serves as the running variable, and the average length of employment of all employees in the last financial year is used as the outcome variable. The regulatory environment created by the Maternity Benefit (Amendment) Act, 2017, introduces an empirically significant discontinuity. The amendment requires establishments with fifty or more employees "to provide for and maintain a creche" (Government of India, 2017 ). This legal threshold results in a discrete shift in regulatory obligation: a company with 49 employees is exempt from providing childcare, whereas a company with 50 employees is legally required to do so. However, adherence to the regulation is imperfect. Some firms above the cutoff do not provide childcare due to cost concerns or limited enforcement mechanisms, whereas some firms below the cutoff do so voluntarily as a recruitment or retention tool. Because firms on either side of the threshold are similar in terms of size, capital constraints, and managerial structure, the threshold serves as a quasi-random predictor of whether childcare is provided. The regulatory cutoff created by the Maternity Benefit (Amendment) Act allows for a Fuzzy RDD. Firms with 50 employees are more likely to provide childcare than those with 49, but compliance varies. This makes the cutoff a useful instrumental variable because eligibility increases the likelihood of receiving treatment without completely determining it (Hahn et al., 2001 ; Cattaneo et al., 2022). For Firms near the threshold, childcare adoption is driven by regulatory pressure rather than managerial preference, making childcare provision independent of retention decisions. This enables the analysis to determine the causal effect of employer-provided childcare on employee retention. In a context like India, where childcare shortages persist and firms dominate employment, establishing such causal evidence shifts the conversation away from labor force participation and toward firm-level retention and human capital preservation. Thus, India offers a unique empirical setting for shifting the academic conversation from labour force participation to firm-level retention. While public childcare allows women to enter the labour force, employer-sponsored childcare has the potential to keep employees and prevent costly human capital losses. In an environment where childcare shortages are acute and firms dominate employment, determining whether childcare causally improves retention is economically and politically important. Using the regulatory threshold established by the Maternity Benefit (Amendment) Act of 2017, this study isolates the causal effect of employer-sponsored childcare on employee retention. In doing so, it closes a critical gap at the intersection of labor economics, gender economics, and organizational management by providing the first causal evidence on whether employer sponsored childcare benefits generate measurable returns for firms in the form of workforce stability. This study offers a practical implication grounded in Human Capital Theory (Rees, 1965 ), which posits that a firm’s investment in its employees can enhance their satisfaction, productivity, and commitment, ultimately leading to higher retention rates. In line with this theory, the present study investigates whether firms can enhance employee retention by investing in childcare facilities, thereby supporting employees' work-life balance and fostering long-term organizational loyalty. 2. Academic Background Most research studies on childcare have predominantly focused on the public policy perspective, mostly examining its influence on labour supply (Hamilton et al., 2025 ; Gurín, 2025 ; Gurín and Kim, 2025 ). A substantial body of empirical work demonstrates that expanding access to affordable childcare significantly increases women’s labour force participation (Gonalons-Pons and Marinescu, 2024 ; Gurín and Kim, 2025 ). The construction of public preschool centers resulted in a significant increase in preschool enrollment and maternal employment (Berlinski and Galiani, 2007 ). Moreover, childcare expansion increased female employment, particularly among low-income households (Paes de Barros et al., 2011). Similarly, childcare availability improved maternal employment and child development outcomes (Brilli et al., 2016 ). Besides, subsidized childcare improves business outcomes in low-income settings (Martínez et al., 2025 ). Several meta-analyses and global policy studies have shown that a lack of childcare infrastructure is a significant barrier to female labour force participation (Elborgh-Woytek et al., 2013 ; Akgunduz and Plantenga, 2014 ; Havnes and Mogstad, 2011 ). These studies conceptualize childcare as a public or community service, focusing on participation outcomes (whether women work at all) rather than retention outcomes (whether women stay with the same firm over time). In contrast, research on employer-sponsored facilities and retention is limited, primarily descriptive (Gurín, 2025 ), and mostly correlational. Early evidence from the United States suggests that employer provided childcare reduces absenteeism and increases return-to-work rates after childbirth (Blake and McCuskey, 2024 ; Portier, 2025 ; Goff et al., 1990 ). Employer provided child care facilities reduce employee stress and enhance employee satisfaction (Morrissey et al., 2011; Hipp et al., 2017 ). Some studies found that family-friendly workplace policies significantly enhance retention after maternity leave (Mat Pozian et al., 2025 ; Glass and Riley, 1998 ). Employees place monetary value on employer-provided childcare (Connelly et al., 2004 ). According to organizational research, family-supportive HR policies reduce turnover intentions while increasing loyalty (Kossek et al., 2011 ; Allen et al., 2013 ). Replacing an employee is expensive—on average, firms spend about 20% of their annual salary per worker replaced (Boushey and Glynn, 2012 ). Despite these incentives, firms rarely adopt childcare benefits voluntarily. However, none of these studies establish a causal relationship. Firms that provide childcare are typically larger, have more formal HR systems, and prioritize retention. As a result, existing research does not determine whether childcare improves employee retention. The lack of causal identification is especially significant in developing countries where public childcare is scarce and employment is dominated by small and medium-sized businesses. The present study contributes to existing literature in two ways. First, this study examines the impact of employer sponsored childcare facilities on employee retention for the first time. Second, the study examines whether investing in employees enhances retention, grounded in Human Capital Theory (Rees, 1965 ). 3. Methods and Materials 3.1 Data Description This study utilizes the Enterprise Survey India 2022, prepared by the World Bank Group. -. The dataset includes 1170 enterprises. The study considers only those firms which have at least 1 permanent female employee. The treatment variable, having childcare facilities, is defined as based on the question “Does the firm provide childcare facilities or a cash grant /stipend for/childcare?”. If a firm had childcare facilities, the treatment variable equals 1, otherwise it equals 0. The running variable is defined as the number of employees from last year. The outcome variable is defined as the average length of employment of all employees in the last financial year. Table 1 Summary Statistics Variable Name With Childcare Facilities Without Childcare Facilities Difference Number of employees last year 174.72 [165.39] 150.60 [413.09] -24.12 (20.09) Length of Average Employment Last Year (Months) 8.47 [3.32] 6.85 [3.89] -1.62*** (0.22) Age of the firm 27.59 [15.79] 23.67 [13.62] -3.92*** (0.87) No of Employees at the start of the firm 100.94 [191.55] 83.31 [189.76] -17.64 (11.37) Sole proprietorship (= 1 if sole proprietorship) 0.48 [0.50] 0.46 [0.50] -0.02 (0.03) Female Ownership (= 1 if female has at least 50% ownership) 0.01 [0.12] 0.04 [0.20] 0.02** (0.01) Observations 468 702 1170 SD in square brackets. SE in parenthesis. * p < 0.10 ** p < 0.05 *** p < 0.01 3.2 Identification Strategy Examination of any impact requires addressing the issue of selection bias. Firms that offer childcare facilities are often systematically different from those that do not, as larger or more resourceful firms are more likely to implement such benefits. Consequently, simple comparisons between firms with and without childcare facilities may lead to biased results due to self-selection. Randomization ensures that the treated and control units remain comparable. We employ the Fuzzy Regression Discontinuity Design that ensures local randomization just above and below a cutoff of a running variable. The Regression Discontinuity Design is an identification based on a discontinuous jump in the likelihood of treatment assignment at the cutoff of a running variable, generating variation assumed to be independent of potential confounding variables (Calonico et al., 2020 ). In the Regression Discontinuity Design, treatment is allocated based on whether a unit's running variable exceeds a known cutoff, with those above receiving treatment and those below not, estimating the local average treatment effect (LATE) (Cattaneo et al., 2022). Regression Discontinuity Design can be of two types: Sharp and Fuzzy. Sharp RDD is applied when the treatment receipt is perfectly determined based on the cutoff of the running variable, and fuzzy RDD is applied when the receipt is imperfectly determined based on the cutoff of the running variable (Calonico et al., 2020 ). In the Fuzzy RDD setup, the cutoff of the running variable increases the probability of receiving the treatment. Instrumental variable estimation is applied in the fuzzy RDD. This study employs a Fuzzy Regression Discontinuity Design, focusing solely on firms just below and above a predetermined cutoff point based on the number of employees last year. We utilize the number of employees last year as the running variable. The identification strategy leverages the threshold established under the Maternity Benefit (Amendment) Act, 2017, which mandates that all establishments with 50 or more employees provide access to a childcare facility (crèche) within a prescribed distance from the workplace. Consequently, the instrumental variable is constructed as a dummy, taking the value of 1 if a firm had 50 or more employees. Instrumental variables take the value 0 if a firm had less than 50 employees. Following the Fuzzy RDD setup, instrumental variable estimation is applied. Two Stage Least Square is used to estimate the LATE. This study uses the following first-stage equation to estimate the predicted treatment: $$\:{X}_{i}={\alpha\:}_{0}+{\alpha\:}_{1}{R}_{i}+\pi\:{B}_{i}+{\alpha\:}_{2}{I}_{i}+{u}_{i}$$ Here, \(\:{X}_{i}\) refers to a dummy variable for having childcare facilities. If a firm had childcare facilities \(\:{X}_{i}\) equal to 1. In contrast, if a firm did not have childcare facilities, \(\:{X}_{i}\) equals 0. \(\:{B}_{i}\) The instrumental variable refers to \(\:{B}_{i}=1\) (R i > = 50 employees). \(\:{R}_{i}\) is the number of employees last year as the running variable. \(\:\pi\:\) denotes the discontinuity in the probability of having childcare facilities around the cutoff. \(\:{I}_{i}\:\) is the interaction of the running variable and the instrumental variable. \(\:{\widehat{X}}_{i}\) is estimated from the above equation and used in the second-stage equation given below: $$\:{Y}_{i}={\beta\:}_{0}+{\beta\:}_{1}{R}_{\varvec{i}}+{\eta\:}_{c}{\widehat{X}}_{i}+{\beta\:}_{2}{I}_{\varvec{i}}{+\epsilon\:}_{i}$$ Here \(\:{Y}_{i}\) captures outcome variable: average length of employment of all employees in last financial year. The LATE is captured by the coefficient \(\:{\eta\:}_{c}\) . In short, this study employs two-stage least squares estimation to calculate the LATE. In the fuzzy Regression Discontinuity Design (RDD) context, the LATE is determined by the ratio of the change in the outcome variable to the change in treatment probability. 4. Results and Analysis 4.1 Main Results The first-stage regression estimation from the two-stage least squares regression is presented in Table 2 . The first-stage estimation reveals a statistically significant positive influence of a firm having childcare facilities, significant at the 1% level. The substantial positive effect of the instrumental variable on a firm with childcare facilities provides evidence of the validity of our instrumental variable, as it meets the relevance condition. Table 2 First-Stage Estimation Result Instrumental Variable Treatment Variable Having Childcare facilities Instrumental Variable(= 1 if a firm has 50 or more employees) 0.31*** Standard Deviation 0.09 Note : Significance levels where ∗∗∗ for p < 0.01. In Fig. 1 , a notable jump is evident in the likelihood of receiving treatment precisely at the cutoff point of the running variable. The sharp increase just before the cutoff illustrates a sudden surge in the likelihood of a firm having childcare facilities at the cutoff. This jump further underscores the significance of the eligibility dummy as a pertinent instrumental variable. Table 3 reports the impact of having childcare facilities on employee retention. The table shows that having childcare facilities has increased length of employees by 6.56 months at 5% significance level. With covariates added, the coefficient becomes 6.43 months. The covariates included are sole proprietorship (= 1 if sole proprietorship), female ownership (= 1 if female has at least 50% ownership), number of employees at the start of the firm and Age of the firm. Table 3 Impact of Being Affected by Air Strike on Food Related Outcomes Variables Length of Average Employment Last Year (Months) (1) (2) RD Estimate 6.56** 6.43** Standard Deviation 2.74 2.57 Covariates No Yes Note: Significance levels where ∗∗ for p < 0.05. 4.2 Tests related to Specification The validity of the Fuzzy RDD relies on two key assumptions: firstly, the continuity of the assignment variable around the cutoff, and secondly, the continuity of relevant pretreatment covariates around the cutoff. To verify these assumptions, two primary tests were conducted within the RDD framework: 1. Assessing continuity in the running variable. 2. Examining continuity in the pretreatment covariates. In addition, the third test checks whether there is any discontinuity of outcome variable at non-discontinuity points because checking continuity of outcome variable at non-discontinuity points is important to verify validity of the original cutoff. 4.2.1. Assessing Continuity in the Running Variable The reliability of the RDD setup is brought into question if there is a substantial spike observed at the cutoff of the assignment variable. To address this concern, the Cattaneo (2020) test was employed to investigate any significant increases in the conditional density of the assignment variable. This test utilized local polynomial density estimators, and the p-value is 0.16, confirming the absence of any significant spikes in the density of the assignment variable at the cutoff point. Figure 2 shows the graph of the Cattaneo et al. (2020) test. 4.2.2. Examining Continuity in the Pretreatment Covariates In the Regression Discontinuity framework, it is crucial to ensure the continuity of pertinent pretreatment covariates. Hence, it is imperative to test whether there are any abrupt changes in these covariates around the cutoff point. We examined pretreatment covariates and found no significant difference in terms of the covariates around 50 employees of a firm. As indicated in Table 4 , the RD estimates of these pretreatment covariates did not exhibit statistical significance, suggesting that there were no significant changes in the covariates around the cutoff of the running variable. Consequently, it can be concluded that the relevant pretreatment covariates remained continuous around the cutoff point. Table 4 Checking for discontinuity in covariates Covariates Regression Discontinuity around the cutoff Sole proprietorship (= 1 if Sole proprietorship) 0.04 (0.09) Female Ownership (= 1 if female has at least 50% ownership) 0.01 (0.04) No of Employees at the start of the firm 5.73 (6.83) No of Employees 3 years ago 0.13 (2.31) Age of the firm 4.20 (2.82) Note : The standard errors are in parentheses. 4.2.3 Examining Continuity of Outcome Variables at Non-Discontinuity Points To check continuity of outcome variable at non-discontinuity points, we conducted RD estimates with different placebo cutoffs, and the results are reported in Table 5 . Table 5 shows that RD estimates with other placebo cutoffs are not statistically significant and confirms robustness of the results in this study. Table 5 Checking Continuity of Outcome Variables at Non-Discontinuity Points Cutoff Length of Average Employment Last Year (Months) 10 Employees 0.72 (-0.81) 20 Employees -1.35 (-0.61) 30 Employees -1.24 (0.02) 40 Employees -0.02 (0.94) Note : Significance levels are using robust method where ∗ for p < 0.10, ∗∗ for p < 0.05, and ∗∗∗ for p < 0.01. 4.3 Sensitivity Analysis This study tests sensitivity of the result to different bandwidths, reported in Table 6 . The results show that childcare facilities increase employment retention, which is consistent with our main result. The sensitivity analysis of the regression discontinuity design (RDD) demonstrates that the estimated impact of the treatment on the average length of employment last year is consistently positive and statistically significant across all bandwidths. The estimated effects range from 5.87 to 6.43 months as the bandwidth increases from 60 to 100. This consistency in both magnitude and significance indicates that the treatment robustly increases average employment duration by roughly six months, regardless of the chosen bandwidth. The stability of the results across different bandwidths suggests that the findings are not sensitive to the specific choice of bandwidth, reinforcing the reliability of the estimated treatment effect. Table 6 Sensitivity Analysis with Different Bandwidths Bandwidth Length of Average Employment Last Year (Months) 60 6.25** (2.63) 70 5.87** (2.50) 80 6.01** (2.55) 90 6.24** (2.67) 100 6.43** (2.81) Note : Significance levels are using robust method where ∗ for p < 0.10, ∗∗ for p < 0.05, and ∗∗∗ for p < 0.01. 5. Discussion The study's findings provide a clear understanding that employer-sponsored childcare facilities have a profound impact on employee retention in Indian firms. Using the regulatory threshold introduced by the Maternity Benefit (Amendment) Act, 2017 as a quasi-experimental setting, the analysis shows that firms providing childcare experience an average increase of approximately 6.5 months in employee tenure. This effect remains strong and consistent across robustness checks, placebo cutoffs, and multiple bandwidth specifications, reinforcing the reliability of the Fuzzy Regression Discontinuity Design used in this study. The result advances childcare literature in several perspectives. Most previous studies have examined childcare from a public policy perspective, primarily focusing on how community or state-based support for childcare programs influences women’s decisions to enter the labour market (e.g., Berlinski and Galiani, 2007 ; Baker et al., 2008 ; Brilli et al., 2016 ). Moreover, the above-referenced studies have shown that affordable childcare increases women’s participation, and this is not limited to situations where women remain with the same employer. In contrast, this study altered the focus from labour force entry to employee retention within firms, addressing an overlooked question in the literature. Past studies examining the specific subject of employer-sponsored childcare have been exploratory and correlational. Early studies suggested that parents experienced less absenteeism or higher return-to-work rates (Goff et al., 1990 ; Glass & Riley, 1998 ); however, these studies could not account for the possibility that childcare was offered in firms that were already more effective at retaining employees. Miller ( 1984 ) suggested that the evidence linking employer-sponsored childcare to turnover was inconclusive, even if a positive relationship existed. This study utilizes a legally imposed threshold and imperfect compliance to address the self-selection concerns that have constrained earlier studies. The present study provides a causal estimate, for the first time in the Indian context, of the effect of childcare on retention. This study provides strong evidence that childcare facilities can have a significant impact on employee retention. The study's findings further align with Human Capital Theory (Rees, 1965 ), which characterizes the skills, experiences, and firm-specific knowledge of employees as valuable assets that organizations naturally want to protect. When employers invest in family-supportive benefits, such as childcare, they facilitate employee retention—not only by increasing job satisfaction and reducing work–family conflict, but also by supporting employees (especially mothers) in remaining within the organization and leveraging the human capital they have accumulated. Recent meta-analytic and large-scale studies have demonstrated that family-friendly policies and supports are associated with higher levels of commitment, lower turnover intentions, and increased retention (Blom et al., 2025 ; Butts et al., 2013). Thus, it is reasonable to interpret the estimated increase in mean tenure of approximately 6.5 months as a tangible benefit from family-friendly employer investments in human capital: employer-funded childcare helps preserve the firm-specific human capital of employees, which lowers replacement and training costs for employers, and strengthens attachment over the long term between the employee and employer. In India, where childcare scarcity is a well-documented barrier to women's continued employment (Chaudhary & Verick, 2014 ; Deshpande & Kabeer, 2019 ), the study's findings are particularly notable. The findings suggest that even at a time when public childcare may not be guaranteed, employer-based childcare may help stabilize the workforce. This study contributes new knowledge to labour economics, gender studies, and organizational studies, demonstrating that childcare policies are not only socially significant but also have economic value for firms that require experience and tacit knowledge from employees. 6. Implications The findings of this study provide causal evidence that employer-sponsored childcare supports improved employee retention, offering valuable information for policymakers seeking to promote women's labour force attachment and firm stability. The Maternity Benefit (Amendment) Act, 2017 requires firms with 50 or more employees to provide access to childcare, but compliance is not uniform, especially among MSMEs. The retention gain demonstrates that childcare is not only an employee welfare program but also a human capital investment that reduces turnover and retains firm-specific skills, resulting in an average increase in retention of approximately 6.5 months. For policymakers, this research highlights the importance of strengthening compliance mechanisms and exploring the potential for incentive-based approaches (e.g., tax credits, subsidies, or co-financing of childcare facilities) to support smaller firms. These types of incentives are particularly salient in India, where access to public childcare remains low, and childcare constraints are an important reason for women leaving the labour market altogether (Chaudhary and Verick, 2014 ; Deshpande and Kabeer, 2019 ). Expanding employer-supported childcare provision can complement government-funded childcare programs and further support related goals for gender equity and labour force participation. Policymakers could investigate cluster-level or community-based approaches to childcare provision, particularly in industrial zones and areas with a high density of MSMEs, to reduce implementation burdens and facilitate equal access to high-quality childcare. From a managerial perspective, the paper demonstrates that providing workplace childcare generates organizational benefits. Employee tenure is expected to increase with the availability of childcare, resulting in lower costs for the organization from recruiting, training, and knowledge loss (Boushey & Glynn, 2012 ; Deresse et al., 2025 ). The provision of childcare, which helps reduce work–family conflict and assists with employee transitions, improves organizational commitment and reduces turnover intention, aligning with the long-term goal of HR (Kossek et al., 2011 ; Allen et al., 2013 ). From an industry perspective, the findings contribute to a deeper understanding of the greater economic value associated with the provision of childcare services. Industries with a large share of female employment or a workforce that requires intensive training would potentially have far-reaching effects from the stabilization of a trained workforce. Childcare services enable an efficient workforce to remain engaged in labour with reduced risk of skill loss and other productivity impairments, while also allowing businesses to maximize their productive capacity (Nataraj et al., 2020 ). Childcare services are particularly valuable for industries where the knowledge of individuals is crucial to operations, as well as for those that rely on stable production cycles. 7. Limitations and Future Research Scope While this study provides causal evidence of the retention effects of employer-sponsored childcare, it has several limitations to be noted. First , the Fuzzy Regression Discontinuity Design only identifies effects for businesses at or near the 50-employee threshold, which limits the generalizability to either very small or very large firms (Cattaneo et al., 2019). Future research could employ complementary causal approaches to investigate the effects of employer-sponsored childcare on employee retention across a broader range of organizational sizes and contexts. Second , the cross-sectional Enterprise Survey data limit the analysis to short-term retention; using longitudinal datasets would allow us to assess long-term career pathways, transitions after parental leave, and the acquisition of firm-specific human capital (Mah et al., 2025 ). Third , retention is assessed solely based on average tenure, thereby eliminating any aspects related to absenteeism, productivity, job satisfaction, and employee wellness, all of which are factors that would have been responsive to family-supportive benefits (Glass and Riley, 1998 ; Goff et al., 1990 ). Fourth , the data provided no insight into the quality of a parent’s childcare arrangements, nor whether parents utilized any kind of childcare, despite research showing that quality influences parents’ decisions on employment (Brilli et al., 2016 ). Future research should incorporate employee-level microdata, analyze sectoral diversity, and identify gender-differentiated impacts, given that women bear a disproportionate share of childcare responsibilities (UNICEF, 2023; Chaudhary and Verick, 2014 ). Cost-benefit analyses and research that combine childcare with complementary human resources policies would also help people better understand employer-supported childcare, thereby enhancing retention and inclusion in the workforce. 8. Conclusion This research establishes causal evidence that employer-sponsored childcare increases employee retention. By employing a Fuzzy Regression Discontinuity Design around the 50-employee cutoff under the Maternity Benefit (Amendment) Act, 2017, the analysis shows that childcare increases average employee tenure by roughly 6.5 months. Furthermore, the findings demonstrate that childcare should be viewed as a strategic capital investment in human capital, rather than a welfare or employee expense; this has important ramifications for firms trying to reduce turnover, and in earlier studies, to mitigate the loss of firm-specific capital. In addition, with limited public childcare and declining female labour participation, employer-supported childcare is one avenue to improve retention and foster gender inclusion. Declarations Ethics approval and consent to participate: Not applicable. Consent for publication: Not applicable. Author Contribution M.A.B., P.S. and M.O.G. wrote the main manuscript text. M.K.B.K. and S.M.S reviewed the manuscript Data Availability The data are available at the following URL: https://www.enterprisesurveys.org/en/data. References Akgunduz, Y. E., & Plantenga, J. (2014). Childcare and maternal employment: A meta-analysis. Journal of Economic Surveys, 28 (3), 446–467. https://doi.org/10.1111/joes.12045 Allen, T. D., French, K. A., Dumani, S., & Shockley, K. M. (2013). Dispositional variables and work–family conflict: A meta-analysis. Journal of Vocational Behavior, 80 (1), 17–26. https://doi.org/10.1016/j.jvb.2011.04.004 Asghar, S., & Zulfiqar, N. (2025). 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The effect of a large expansion of pre-primary school facilities on preschool attendance and maternal employment. Labour Economics, 14 (3), 665–680. https://doi.org/10.1016/j.labeco.2007.01.003 Blake, V. K., & McCuskey, E. Y. (2024). Employer-Sponsored Reproduction. Columbia Law Review, 124(2), 273-360. Bloom, N., Eifert, B., Mahajan, A., McKenzie, D., & Roberts, J. (2013). Does management matter? Evidence from India. Quarterly Journal of Economics, 128 (1), 1–51. https://doi.org/10.1093/qje/qjs044 Blom, R., Jaspers, E., Knies, E., & van der Lippe, T. (2025). Family-friendly policies and workplace supports: A meta-analysis of their effects on career, job, and work-family outcomes. Journal of Vocational Behavior, 157, 104091. Boushey, H., & Glynn, S. J. (2012). There are significant business costs to replacing employees. Center for American Progress , 16 , 1-9 Brilli, Y., Del Boca, D., & Pronzato, C. D. (2016). Does child care availability play a role in maternal employment and children’s development? Evidence from Italy. Review of Economics of the Household, 14 (1), 27–51. https://doi.org/10.1007/s11150-013-9227-4 Calonico, S., Cattaneo, M. D., & Farrell, M. H. (2020). Optimal bandwidth choice for robust bias-corrected inference in regression discontinuity designs. The Econometrics Journal, 23 (2), 192–210. Cattaneo, M. D., & Titiunik, R. (2022). Regression discontinuity designs. Annual Review of Economics , 14 (1), 821-851. Chaudhary, R., & Verick, S. (2014). Female labour force participation in India and beyond . ILO Asia-Pacific Working Paper. Chaudhary, N. S., Sanjeev, R., & Natrajan, N. S. (2025). Qualitative analysis of employee and employer perspectives on India’s Maternity Benefit Act. International Journal of Organizational Analysis. Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOA-06-2024-4555 Chordiya, R. (2019). Are federal child care programs sufficient for employee retention? Critical examination from a gendered perspective. The American Review of Public Administration, 49 (3), 338–352. Cloutier, O., Felusiak, L., Hill, C., & Pemberton-Jones, E. J. (2015). The importance of developing strategies for employee retention. Journal of Leadership, Accountability & Ethics, 12 (2), 119–129. Connelly, R., DeGraff, D. S., & Willis, R. A. (2004). The value of employer-sponsored child care to employees. Industrial Relations: A Journal of Economy & Society, 43 (4), 759–792. https://doi.org/10.1111/j.0019-8676.2004.00361.x Deresse, F. N., Oya, C., & Otchia, C. S. (2025). World Development Perspectives. World Development, 40(10073), 4. Deshpande, A., & Kabeer, N. (2019). (In)visibility, care and cultural barriers: The size and shape of women’s work in India . LSE Working Paper. http://eprints.lse.ac.uk/100992/ Elborgh-Woytek, K., Newiak, M., Kochhar, K., Fabrizio, S., Kpodar, K., Wingender, P., ... & Schwartz, G. (2013). Women, work, and the economy: Economic gains from gender equity . IMF Staff Discussion Note 13/10. Glass, J. L., & Riley, L. (1998). Family responsive policies and employee retention following childbirth. Social Forces, 76 (4), 1401–1435. https://doi.org/10.2307/3005840 Goff, S. J., Mount, M. K., & Jamison, R. L. (1990). Employer-supported child care, work/family conflict, and absenteeism: A field study. Personnel Psychology, 43 (4), 793–809. https://doi.org/10.1111/j.1744-6570.1990.tb00683.x Government of India. (2017). Maternity Benefit (Amendment) Act, 2017 . Gonalons-Pons, P., & Marinescu, I. (2024). Care Labor and Family Income Inequality: How Childcare Costs Exacerbate Inequality among US Families. American Sociological Review , 89 (6), 1075-1103. Gurín, M. (2025). Understanding Path‐Departing Changes in Childcare Policy: The Influence of Self‐Undermining Policy Feedback. Social Policy & Administration, 59(5), 865-877. Gurín, M., & Kim, J. H. (2025). The multidimensionality of childcare policy change: novel policy approaches, competing policies and feedback tensions. Journal of Social Policy, 1-18. Hahn, J., Todd, P., & van der Klaauw, W. (2001). Estimation of treatment effects with a regression-discontinuity design. Econometrica, 69 (1), 201–209. https://doi.org/10.1111/1468-0262.00183 Hardy, M., Kagy, G., Demeke, E., Witte, M., & Meyer, C. J. (2024). The impact of firm downsizing on workers: Evidence from Ethiopia’s ready-made garment industry. World Development, 176 , 106412. Havnes, T., & Mogstad, M. (2011). No child left behind: Subsidized child care and children’s long-run outcomes. American Economic Journal: Economic Policy, 3 (2), 97–129. https://doi.org/10.1257/pol.3.2.97 Hamilton, M., Adamson, E., Williams, A., Craig, L., & Timonen, V. (2025). The Relationship Between Public Policy and Grandparents’ Involvement in Childcare: A Scoping Review of the International Evidence. Social Policy and Society , 1-20. Hipp, L., Morrissey, T. W., & Warner, M. E. (2017). Who participates and who benefits from employer‐provided child‐care assistance?. Journal of Marriage and Family , 79 (3), 614-635. Huang, J. L., & Pearce, M. (2013). The other side of the coin: Vocational interests, interest differentiation and annual income at the occupation level of analysis. Journal of Vocational Behavior, 83(3), 315-326. International Labour Organization (2018). Care work and care jobs for the future of decent work . Geneva: ILO. International Labour Organization (2025). Barriers to women’s employment. ILO InfoStories. https://webapps.ilo.org/infostories/en-gb/stories/employment/barriers-women#intro Geneva: ILO. Kossek, E. E., Baltes, B. B., & Matthews, R. A. (2011). How work–family research can finally have an impact on organizations. Industrial and Organizational Psychology, 4 (3), 352–387. https://doi.org/10.1111/j.1754-9434.2011.01353.x Martínez, C. A., Kugler, M., & Prillaman, S. A. (2025). Childcare, labor supply, and business development: Experimental evidence from Uganda. American Economic Journal: Applied Economics, 17 (2), 75–101. https://doi.org/10.1257/app.20230227 Maj, J., Hamza‐Orlinska, A., Sytnik, I., Stopochkin, A., & Özbilgin, M. (2025). Misrecognition and labor market inclusion of refugee mothers. Gender, Work & Organization, 32(2), 653-672. Mah, S., Huang, C., & Yun, S. (2025). Overqualified employees’ actual turnover: The role of growth dissatisfaction and the contextual effects of age and pay. Journal of Business and Psychology, 40(2), 419-437. Mahajne, I., & Allassad Alhuzail, N. (2024). Minority social workers share their previously tacit knowledge: patterns and importance of sharing and the context. The British Journal of Social Work, 54(7), 2919-2936. Mat Pozian, N., Miller, Y. D., & Mays, J. (2025). Availability and utilisation of family-friendly work conditions for women in Malaysia: a review. International Journal of Social Economics, 52(5), 780-819. Miller, T. I. (1984). The effects of employer-sponsored child care on employee absenteeism, turnover, productivity, recruitment or job satisfaction: What is claimed and what is known. Personnel Psychology, 37 (2), 277–289. Mirabito, T., Collett, J., & Talbott, J. (2025). Signing Off: An Examination Into Female Journalists Leaving Legacy Media. Communication & Sport, 21674795251321746. Ministry of Micro, Small and Medium Enterprises (MSME). (2022). Annual report 2021–22 . New Delhi: India. Morrissey, T. W., & Warner, M. E. (2011). An exploratory study of the impacts of an employer-supported child care program. Early Childhood Research Quarterly , 26 (3), 344-354. Nataraj, S., Pérez-Arce, F., & Kumar, K. B. (2020). Productivity in Indian Firms . RAND Corporation. Paes de Barros, R., Olinto, P., Lunde, T., & Carvalho, M. (2011). The impact of access to free childcare on women’s labor market outcomes: Evidence from Brazil . World Bank Policy Research Working Paper 5352. Pemer, F., & Werr, A. (2025). Defusing digital disruption through creative accumulation: technology‐induced innovation in professional service firms. Journal of Management Studies, 62(5), 1945-1990. Portier, C. (2025). Occupational autonomy, paid maternity leave, and mothers' return to work after childbirth. Journal of Marriage and Family. https://doi.org/10.1111/jomf.13089 Rees, A. (1965). [Review of Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education , by G. S. Becker]. The American Economic Review , 55 (4), 958–960. http://www.jstor.org/stable/1823991 Rim, H., Kwon, K. Y., Fong, E., & Kim, J. (2025). Perceptions of Workplace Gender Discrimination and Fertility Intentions among Married Working Women in Korea: Insights from Asymmetric Fixed Effects Models. Population Research and Policy Review, 44(4), 39. Sarkar, S., Sahoo, S., & Klasen, S. (2019). Employment transitions of women in India. Demography India, 48 (2), 1–22. Sexsmith, K., Huerta‐Arredondo, I., Gorgo‐Simcox, M., Palacios, E., & Griffin, M. A. (2024). Farm Labor Shortage in the Pennsylvania Mushroom Industry: A Gender‐Sensitive Comparison of Farmer and Farmworker Perspectives. Rural Sociology, 89(3), 404-430. The World Bank Group. (2022). India – World Bank Enterprise Survey (WBES) 2022 [Data set].The World Bank. https://www.enterprisesurveys.org/en/data Valentova, M., Maas, R., & Koslowski, A. (2025). Parental Leave Challenges From the Perspective of Employers: Understanding Sectors with Low Take‐Up by Fathers. Gender, Work & Organization. von Gleichen, R. D. (2025). Employer-provided childcare across the 50 United States: the normative importance of public childcare and female leadership. Journal of Social Policy, 54(2), 574-594. World Bank. (2023). World development indicators: Female labor force participation rate (India) . https://data.worldbank.org Zając, T., Magda, I., Bożykowski, M., Chłoń-Domińczak, A., & Jasiński, M. (2025). Gender pay gaps across STEM fields of study. Studies in Higher Education, 50(1), 126-139. Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8564553","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":582469483,"identity":"dc4a33ae-0427-41cc-b425-f1b383b95b9e","order_by":0,"name":"Md Abdul Bari","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA5ElEQVRIiWNgGAWjYDACZuaGAxAWGwPDBxDFTlALI0IL4wwQxUzQGsYGBpgWZh6wIQQ0mLMzNh66wWCTJ+/AliZt82ubPB8zA+OHjzm4tVg2MzYczmFIKzY8wHZMOrfvtmEbMwOz5MxtuLUYHAZrOZy4sYG9TTq35zYjUAsbMy9hLf8hWix7btsTq+VA4nwGoMMYftxOJFKLQXLiBma2ZMvehtvJbcyMzfj9cv7w4c85FXaJ89vbDG/8+HPbdn5788EPH/FogWoEWQekGdtAPHhMEQDyYHV/iFM8CkbBKBgFIwsAAGNXThf+kvtIAAAAAElFTkSuQmCC","orcid":"","institution":"Hiroshima University","correspondingAuthor":true,"prefix":"","firstName":"Md","middleName":"Abdul","lastName":"Bari","suffix":""},{"id":582469484,"identity":"ca456faa-183c-49d9-87f2-8938c1e21b80","order_by":1,"name":"Mohammad Osman Gani","email":"","orcid":"","institution":"University Canada West","correspondingAuthor":false,"prefix":"","firstName":"Mohammad","middleName":"Osman","lastName":"Gani","suffix":""},{"id":582469485,"identity":"fd8a93ce-5940-432d-a72c-3d4f58589aa8","order_by":2,"name":"Poulami Sarker","email":"","orcid":"","institution":"The University of Texas at Dallas","correspondingAuthor":false,"prefix":"","firstName":"Poulami","middleName":"","lastName":"Sarker","suffix":""},{"id":582469487,"identity":"04c3baa2-c132-40bf-8135-b717bbcbd6c6","order_by":3,"name":"Md Khalid Bin Kamal","email":"","orcid":"","institution":"The University of Texas at Dallas","correspondingAuthor":false,"prefix":"","firstName":"Md","middleName":"Khalid Bin","lastName":"Kamal","suffix":""},{"id":582469490,"identity":"49976145-5710-4cb8-845b-713a42a95e41","order_by":4,"name":"Syed Mohammad Sadat","email":"","orcid":"","institution":"Bangladesh Bank","correspondingAuthor":false,"prefix":"","firstName":"Syed","middleName":"Mohammad","lastName":"Sadat","suffix":""}],"badges":[],"createdAt":"2026-01-09 22:53:13","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8564553/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8564553/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":101526132,"identity":"c5d5cef5-fdd1-4e45-9822-f404fbfe0bb5","added_by":"auto","created_at":"2026-01-30 18:25:20","extension":"png","order_by":1,"title":"Figure 1","display":"","copyAsset":false,"role":"figure","size":48475,"visible":true,"origin":"","legend":"\u003cp\u003e\u003cstrong\u003eJump in the Probability of Having Childcare Facilities at the Cutoff\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eNotes: The horizontal axis is the number of employees last year and the vertical axis shows the probability of having childcare facilities. Every dot signifies the average of the sample within a bin, and every line signifies the second-order polynomial approximating the outcome variable.\u003c/p\u003e","description":"","filename":"1.png","url":"https://assets-eu.researchsquare.com/files/rs-8564553/v1/d82c5c621205ca05a5e11728.png"},{"id":101526190,"identity":"43afa0fd-f81b-4204-8cca-57f277094ff9","added_by":"auto","created_at":"2026-01-30 18:25:27","extension":"png","order_by":2,"title":"Figure 2","display":"","copyAsset":false,"role":"figure","size":40526,"visible":true,"origin":"","legend":"\u003cp\u003eThe manipulation test proposed by Cattaneo et al. (2018)\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eNotes:\u003c/em\u003e In all the figures above, the horizontal axis represents number of employees last year, and the vertical axis shows the probability density function.\u003c/p\u003e","description":"","filename":"2.png","url":"https://assets-eu.researchsquare.com/files/rs-8564553/v1/6f26b34f1e39aae73f11b378.png"},{"id":104401592,"identity":"637af492-147c-452c-8470-76d2b1f26b60","added_by":"auto","created_at":"2026-03-11 12:13:04","extension":"pdf","order_by":0,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":962954,"visible":true,"origin":"","legend":"","description":"","filename":"manuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8564553/v1/da88c72f-6379-41b7-b2c8-0bc53b8f0723.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"The Impact of Employer-Sponsored Childcare Facilities on Employee Retention: A Fuzzy Regression Discontinuity Approach","fulltext":[{"header":"1. Introduction","content":"\u003cp\u003eFirms are increasingly aware that retaining skilled workers is more valuable than constantly replacing them (Pemer and Werr, \u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). According to the International Labour Organization (\u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e2025\u003c/span\u003e), women make up less than 47% of the global workforce compared to 72% of men\u0026mdash;a striking 25-point gap that rises to more than 50 points in some regions. Even after having a smaller number of women participating in the world, women leave their workplace due to workplace discrimination (Rim et al., \u003cspan citationid=\"CR53\" class=\"CitationRef\"\u003e2025\u003c/span\u003e), gender pay gaps (Zając et al., \u003cspan citationid=\"CR60\" class=\"CitationRef\"\u003e2025\u003c/span\u003e), lack of family support (Valentova et al., \u003cspan citationid=\"CR57\" class=\"CitationRef\"\u003e2025\u003c/span\u003e), limited promotion opportunities (Azmat et al., \u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e2025\u003c/span\u003e), and unsafe work environment (Mirabito et al., \u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). In addition, harassment, unsafe transportation, and inflexible or male-dominated workplace cultures push women to leave jobs prematurely (Asghar and Zulfiqar, \u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). In underdeveloped and developing countries, many face pressure due to a lack of maternity benefits (Chaudhary et al., \u003cspan citationid=\"CR17\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). Women leave their jobs after giving birth mostly because of a lack of childcare options (Maj et al., \u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). In such circumstances, employer-sponsored childcare becomes a strategic human resource tool rather than a supplementary welfare benefit (von Gleichen, \u003cspan citationid=\"CR58\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). However, the emergence of employer-specific childcare facilities has received relatively little attention in the employee retention literature (Hardy et al., \u003cspan citationid=\"CR31\" class=\"CitationRef\"\u003e2024\u003c/span\u003e; Sexsmith et al., \u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e2024\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe International Labour Organization (\u003cspan citationid=\"CR36\" class=\"CitationRef\"\u003e2018\u003c/span\u003e) agrees that childcare scarcity is a structural barrier to women's labour supply. The World Bank (\u003cspan citationid=\"CR59\" class=\"CitationRef\"\u003e2023\u003c/span\u003e) estimates that India's female labour force participation remains among the lowest in the world, at around 33%. Qualitative research suggests that childcare constraints drive this exit: women frequently face a \"forced choice\" between paid work and childcare, and childcare scarcity pushes women out of the labour market (Deshpande and Kabeer \u003cspan citationid=\"CR22\" class=\"CitationRef\"\u003e2019\u003c/span\u003e; Chaudhary and Verick, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e2014\u003c/span\u003e; Sarkar et al., \u003cspan citationid=\"CR54\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). These childcare constraints carry greater consequences for Indian firms. According to the Ministry of Micro, Small, and Medium Enterprises (2022), more than 97% of Indian firms are Micro, Small, or Medium Enterprises, accounting for roughly 30% of GDP and nearly half of non-agricultural employment. Because Firms rely on firm-specific tacit knowledge and have lean staffing, the departure of a single experienced employee can disrupt production (Nataraj et al., \u003cspan citationid=\"CR48\" class=\"CitationRef\"\u003e2020\u003c/span\u003e). Smaller businesses also invest less in training due to the high perceived risk of employee turnover (Bloom et al., \u003cspan citationid=\"CR10\" class=\"CitationRef\"\u003e2013\u003c/span\u003e), making employee retention even more crucial. This study examines employer-provided childcare facilities as a policy tool to reduce employee turnover.\u003c/p\u003e \u003cp\u003eIn organizational studies, it remains unclear whether childcare results in measurable retention gains for firms. The question whether employer sponsored child care facilities impact employee retention is important because firms incur direct and indirect costs when trained employees leave the organization (Mah et al., \u003cspan citationid=\"CR41\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). When an employee leaves, the company loses accumulated tacit knowledge and must devote time and resources to finding and training a replacement (Mahajne et al., 2024). The primary aim of employee retention strategies and practices is twofold: to reduce employee turnover and to minimize the costs associated with recruiting, training, and orienting new employees (Cloutier et al., \u003cspan citationid=\"CR19\" class=\"CitationRef\"\u003e2015\u003c/span\u003e). Human capital theory posits that when trained employees leave, firms experience a loss of productivity because firm-specific skills cannot be easily transferred (Rees, \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e1965\u003c/span\u003e). The retention problem is especially acute for women returning from maternity leave, as childcare responsibilities, limited childcare access, and rigid work arrangements increase the likelihood of quitting. Childcare influences both household labor supply decisions and corporate strategic decisions to retain valuable employees. Against this backdrop, the central question guiding this study is:\u003c/p\u003e \u003cp\u003e \u003cem\u003eRQ1: Does employer-sponsored childcare have a causal impact on employee retention in firms?\u003c/em\u003e \u003c/p\u003e \u003cp\u003eMore specifically, the study aims to investigate whether firms that cross the legally mandated childcare threshold under India\u0026rsquo;s Maternity Benefit (Amendment) Act, 2017\u0026mdash;requiring establishments with 50 or more employees to provide a cr\u0026egrave;che\u0026mdash;experience higher average employment tenure. By focusing on retention rather than labor force re-entry, this study examines whether childcare benefits translate into measurable firm-level human capital gains.\u003c/p\u003e \u003cp\u003eFirms that offer childcare facilities are often systematically different from those that do not, as larger or more resourceful firms are more likely to implement such benefits. Consequently, simple comparisons between firms with and without childcare facilities will lead to biased results due to self-selection. To address this issue, the present study employs a Fuzzy Regression Discontinuity Design (Fuzzy RDD) to estimate the causal impact of workplace childcare facilities on labour retention in the Indian context. The identification strategy exploits the threshold established under the Maternity Benefit (Amendment) Act, 2017, which requires all establishments with 50 or more employees to provide access to a childcare (cr\u0026egrave;che) facility within a prescribed distance from the workplace (Bala, \u003cspan citationid=\"CR6\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). The number of employees in each firm serves as the running variable, and the average length of employment of all employees in the last financial year is used as the outcome variable. The regulatory environment created by the Maternity Benefit (Amendment) Act, 2017, introduces an empirically significant discontinuity. The amendment requires establishments with fifty or more employees \"to provide for and maintain a creche\" (Government of India, \u003cspan citationid=\"CR26\" class=\"CitationRef\"\u003e2017\u003c/span\u003e). This legal threshold results in a discrete shift in regulatory obligation: a company with 49 employees is exempt from providing childcare, whereas a company with 50 employees is legally required to do so. However, adherence to the regulation is imperfect. Some firms above the cutoff do not provide childcare due to cost concerns or limited enforcement mechanisms, whereas some firms below the cutoff do so voluntarily as a recruitment or retention tool. Because firms on either side of the threshold are similar in terms of size, capital constraints, and managerial structure, the threshold serves as a quasi-random predictor of whether childcare is provided. The regulatory cutoff created by the Maternity Benefit (Amendment) Act allows for a Fuzzy RDD. Firms with 50 employees are more likely to provide childcare than those with 49, but compliance varies. This makes the cutoff a useful instrumental variable because eligibility increases the likelihood of receiving treatment without completely determining it (Hahn et al., \u003cspan citationid=\"CR30\" class=\"CitationRef\"\u003e2001\u003c/span\u003e; Cattaneo et al., 2022). For Firms near the threshold, childcare adoption is driven by regulatory pressure rather than managerial preference, making childcare provision independent of retention decisions. This enables the analysis to determine the causal effect of employer-provided childcare on employee retention.\u003c/p\u003e \u003cp\u003eIn a context like India, where childcare shortages persist and firms dominate employment, establishing such causal evidence shifts the conversation away from labor force participation and toward firm-level retention and human capital preservation. Thus, India offers a unique empirical setting for shifting the academic conversation from labour force participation to firm-level retention. While public childcare allows women to enter the labour force, employer-sponsored childcare has the potential to keep employees and prevent costly human capital losses. In an environment where childcare shortages are acute and firms dominate employment, determining whether childcare causally improves retention is economically and politically important. Using the regulatory threshold established by the Maternity Benefit (Amendment) Act of 2017, this study isolates the causal effect of employer-sponsored childcare on employee retention. In doing so, it closes a critical gap at the intersection of labor economics, gender economics, and organizational management by providing the first causal evidence on whether employer sponsored childcare benefits generate measurable returns for firms in the form of workforce stability. This study offers a practical implication grounded in Human Capital Theory (Rees, \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e1965\u003c/span\u003e), which posits that a firm\u0026rsquo;s investment in its employees can enhance their satisfaction, productivity, and commitment, ultimately leading to higher retention rates. In line with this theory, the present study investigates whether firms can enhance employee retention by investing in childcare facilities, thereby supporting employees' work-life balance and fostering long-term organizational loyalty.\u003c/p\u003e"},{"header":"2. Academic Background","content":"\u003cp\u003eMost research studies on childcare have predominantly focused on the public policy perspective, mostly examining its influence on labour supply (Hamilton et al., \u003cspan citationid=\"CR33\" class=\"CitationRef\"\u003e2025\u003c/span\u003e; Gur\u0026iacute;n, \u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e2025\u003c/span\u003e; Gur\u0026iacute;n and Kim, \u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). A substantial body of empirical work demonstrates that expanding access to affordable childcare significantly increases women\u0026rsquo;s labour force participation (Gonalons-Pons and Marinescu, \u003cspan citationid=\"CR27\" class=\"CitationRef\"\u003e2024\u003c/span\u003e; Gur\u0026iacute;n and Kim, \u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). The construction of public preschool centers resulted in a significant increase in preschool enrollment and maternal employment (Berlinski and Galiani, \u003cspan citationid=\"CR8\" class=\"CitationRef\"\u003e2007\u003c/span\u003e). Moreover, childcare expansion increased female employment, particularly among low-income households (Paes de Barros et al., 2011). Similarly, childcare availability improved maternal employment and child development outcomes (Brilli et al., \u003cspan citationid=\"CR13\" class=\"CitationRef\"\u003e2016\u003c/span\u003e). Besides, subsidized childcare improves business outcomes in low-income settings (Mart\u0026iacute;nez et al., \u003cspan citationid=\"CR39\" class=\"CitationRef\"\u003e2025\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eSeveral meta-analyses and global policy studies have shown that a lack of childcare infrastructure is a significant barrier to female labour force participation (Elborgh-Woytek et al., \u003cspan citationid=\"CR23\" class=\"CitationRef\"\u003e2013\u003c/span\u003e; Akgunduz and Plantenga, \u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e2014\u003c/span\u003e; Havnes and Mogstad, \u003cspan citationid=\"CR32\" class=\"CitationRef\"\u003e2011\u003c/span\u003e). These studies conceptualize childcare as a public or community service, focusing on participation outcomes (whether women work at all) rather than retention outcomes (whether women stay with the same firm over time).\u003c/p\u003e \u003cp\u003eIn contrast, research on employer-sponsored facilities and retention is limited, primarily descriptive (Gur\u0026iacute;n, \u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e2025\u003c/span\u003e), and mostly correlational. Early evidence from the United States suggests that employer provided childcare reduces absenteeism and increases return-to-work rates after childbirth (Blake and McCuskey, \u003cspan citationid=\"CR9\" class=\"CitationRef\"\u003e2024\u003c/span\u003e; Portier, \u003cspan citationid=\"CR51\" class=\"CitationRef\"\u003e2025\u003c/span\u003e; Goff et al., \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e1990\u003c/span\u003e). Employer provided child care facilities reduce employee stress and enhance employee satisfaction (Morrissey et al., 2011; Hipp et al., \u003cspan citationid=\"CR34\" class=\"CitationRef\"\u003e2017\u003c/span\u003e). Some studies found that family-friendly workplace policies significantly enhance retention after maternity leave (Mat Pozian et al., \u003cspan citationid=\"CR43\" class=\"CitationRef\"\u003e2025\u003c/span\u003e; Glass and Riley, \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e1998\u003c/span\u003e). Employees place monetary value on employer-provided childcare (Connelly et al., \u003cspan citationid=\"CR20\" class=\"CitationRef\"\u003e2004\u003c/span\u003e). According to organizational research, family-supportive HR policies reduce turnover intentions while increasing loyalty (Kossek et al., \u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2011\u003c/span\u003e; Allen et al., \u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2013\u003c/span\u003e). Replacing an employee is expensive\u0026mdash;on average, firms spend about 20% of their annual salary per worker replaced (Boushey and Glynn, \u003cspan citationid=\"CR12\" class=\"CitationRef\"\u003e2012\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eDespite these incentives, firms rarely adopt childcare benefits voluntarily. However, none of these studies establish a causal relationship. Firms that provide childcare are typically larger, have more formal HR systems, and prioritize retention. As a result, existing research does not determine whether childcare improves employee retention. The lack of causal identification is especially significant in developing countries where public childcare is scarce and employment is dominated by small and medium-sized businesses. The present study contributes to existing literature in two ways. First, this study examines the impact of employer sponsored childcare facilities on employee retention for the first time. Second, the study examines whether investing in employees enhances retention, grounded in Human Capital Theory (Rees, \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e1965\u003c/span\u003e).\u003c/p\u003e"},{"header":"3. Methods and Materials","content":"\u003cdiv id=\"Sec4\" class=\"Section2\"\u003e \u003ch2\u003e3.1 Data Description\u003c/h2\u003e \u003cp\u003eThis study utilizes the Enterprise Survey India 2022, prepared by the World Bank Group. -. The dataset includes 1170 enterprises. The study considers only those firms which have at least 1 permanent female employee. The treatment variable, having childcare facilities, is defined as based on the question \u0026ldquo;Does the firm provide childcare facilities or a cash grant /stipend for/childcare?\u0026rdquo;. If a firm had childcare facilities, the treatment variable equals 1, otherwise it equals 0. The running variable is defined as the number of employees from last year. The outcome variable is defined as the average length of employment of all employees in the last financial year.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab1\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 1\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eSummary Statistics\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"4\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eVariable Name\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eWith Childcare Facilities\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eWithout Childcare Facilities\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eDifference\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNumber of employees last year\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e174.72\u003c/p\u003e \u003cp\u003e[165.39]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e150.60\u003c/p\u003e \u003cp\u003e[413.09]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-24.12\u003c/p\u003e \u003cp\u003e(20.09)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLength of Average Employment Last Year (Months)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e8.47\u003c/p\u003e \u003cp\u003e[3.32]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e6.85\u003c/p\u003e \u003cp\u003e[3.89]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-1.62***\u003c/p\u003e \u003cp\u003e(0.22)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eAge of the firm\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e27.59\u003c/p\u003e \u003cp\u003e[15.79]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e23.67\u003c/p\u003e \u003cp\u003e[13.62]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-3.92***\u003c/p\u003e \u003cp\u003e(0.87)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNo of Employees at the start of the firm\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e100.94\u003c/p\u003e \u003cp\u003e[191.55]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e83.31\u003c/p\u003e \u003cp\u003e[189.76]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-17.64\u003c/p\u003e \u003cp\u003e(11.37)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eSole proprietorship (=\u0026thinsp;1 if sole proprietorship)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.48\u003c/p\u003e \u003cp\u003e[0.50]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.46\u003c/p\u003e \u003cp\u003e[0.50]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-0.02\u003c/p\u003e \u003cp\u003e(0.03)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFemale Ownership (=\u0026thinsp;1 if female has at least 50% ownership)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.01\u003c/p\u003e \u003cp\u003e[0.12]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.04\u003c/p\u003e \u003cp\u003e[0.20]\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.02**\u003c/p\u003e \u003cp\u003e(0.01)\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eObservations\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e468\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e702\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e1170\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eSD in square brackets. SE in parenthesis. * p\u0026thinsp;\u0026lt;\u0026thinsp;0.10 ** p\u0026thinsp;\u0026lt;\u0026thinsp;0.05 *** p\u0026thinsp;\u0026lt;\u0026thinsp;0.01\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec5\" class=\"Section2\"\u003e \u003ch2\u003e3.2 Identification Strategy\u003c/h2\u003e \u003cp\u003eExamination of any impact requires addressing the issue of selection bias. Firms that offer childcare facilities are often systematically different from those that do not, as larger or more resourceful firms are more likely to implement such benefits. Consequently, simple comparisons between firms with and without childcare facilities may lead to biased results due to self-selection. Randomization ensures that the treated and control units remain comparable. We employ the Fuzzy Regression Discontinuity Design that ensures local randomization just above and below a cutoff of a running variable. The Regression Discontinuity Design is an identification based on a discontinuous jump in the likelihood of treatment assignment at the cutoff of a running variable, generating variation assumed to be independent of potential confounding variables (Calonico et al., \u003cspan citationid=\"CR14\" class=\"CitationRef\"\u003e2020\u003c/span\u003e). In the Regression Discontinuity Design, treatment is allocated based on whether a unit's running variable exceeds a known cutoff, with those above receiving treatment and those below not, estimating the local average treatment effect (LATE) (Cattaneo et al., 2022). Regression Discontinuity Design can be of two types: Sharp and Fuzzy. Sharp RDD is applied when the treatment receipt is perfectly determined based on the cutoff of the running variable, and fuzzy RDD is applied when the receipt is imperfectly determined based on the cutoff of the running variable (Calonico et al., \u003cspan citationid=\"CR14\" class=\"CitationRef\"\u003e2020\u003c/span\u003e). In the Fuzzy RDD setup, the cutoff of the running variable increases the probability of receiving the treatment. Instrumental variable estimation is applied in the fuzzy RDD.\u003c/p\u003e \u003cp\u003eThis study employs a Fuzzy Regression Discontinuity Design, focusing solely on firms just below and above a predetermined cutoff point based on the number of employees last year. We utilize the number of employees last year as the running variable. The identification strategy leverages the threshold established under the Maternity Benefit (Amendment) Act, 2017, which mandates that all establishments with 50 or more employees provide access to a childcare facility (cr\u0026egrave;che) within a prescribed distance from the workplace. Consequently, the instrumental variable is constructed as a dummy, taking the value of 1 if a firm had 50 or more employees. Instrumental variables take the value 0 if a firm had less than 50 employees.\u003c/p\u003e \u003cp\u003eFollowing the Fuzzy RDD setup, instrumental variable estimation is applied. Two Stage Least Square is used to estimate the LATE. This study uses the following first-stage equation to estimate the predicted treatment:\u003cdiv id=\"Equa\" class=\"Equation\"\u003e\u003cdiv format=\"TEX\" class=\"mathdisplay\" id=\"FileID_Equa\" name=\"EquationSource\"\u003e\n$$\\:{X}_{i}={\\alpha\\:}_{0}+{\\alpha\\:}_{1}{R}_{i}+\\pi\\:{B}_{i}+{\\alpha\\:}_{2}{I}_{i}+{u}_{i}$$\u003c/div\u003e\u003c/div\u003e\u003c/p\u003e \u003cp\u003eHere, \u003cspan class=\"InlineEquation\"\u003e\u003cspan class=\"mathinline\"\u003e\\(\\:{X}_{i}\\)\u003c/span\u003e\u003c/span\u003e refers to a dummy variable for having childcare facilities. If a firm had childcare facilities \u003cspan class=\"InlineEquation\"\u003e\u003cspan class=\"mathinline\"\u003e\\(\\:{X}_{i}\\)\u003c/span\u003e\u003c/span\u003e equal to 1. In contrast, if a firm did not have childcare facilities, \u003cspan class=\"InlineEquation\"\u003e\u003cspan class=\"mathinline\"\u003e\\(\\:{X}_{i}\\)\u003c/span\u003e\u003c/span\u003e equals 0. \u003cspan class=\"InlineEquation\"\u003e\u003cspan class=\"mathinline\"\u003e\\(\\:{B}_{i}\\)\u003c/span\u003e\u003c/span\u003e The instrumental variable refers to \u003cspan class=\"InlineEquation\"\u003e\u003cspan class=\"mathinline\"\u003e\\(\\:{B}_{i}=1\\)\u003c/span\u003e\u003c/span\u003e (R\u003csub\u003ei\u003c/sub\u003e\u0026thinsp;\u0026gt;\u0026thinsp;=\u0026thinsp;50 employees). \u003cspan class=\"InlineEquation\"\u003e\u003cspan class=\"mathinline\"\u003e\\(\\:{R}_{i}\\)\u003c/span\u003e\u003c/span\u003e is the number of employees last year as the running variable. \u003cspan class=\"InlineEquation\"\u003e\u003cspan class=\"mathinline\"\u003e\\(\\:\\pi\\:\\)\u003c/span\u003e\u003c/span\u003e denotes the discontinuity in the probability of having childcare facilities around the cutoff. \u003cspan class=\"InlineEquation\"\u003e\u003cspan class=\"mathinline\"\u003e\\(\\:{I}_{i}\\:\\)\u003c/span\u003e\u003c/span\u003eis the interaction of the running variable and the instrumental variable.\u003c/p\u003e \u003cp\u003e \u003cspan class=\"InlineEquation\"\u003e \u003cspan class=\"mathinline\"\u003e\\(\\:{\\widehat{X}}_{i}\\)\u003c/span\u003e \u003c/span\u003e is estimated from the above equation and used in the second-stage equation given below:\u003cdiv id=\"Equb\" class=\"Equation\"\u003e\u003cdiv format=\"TEX\" class=\"mathdisplay\" id=\"FileID_Equb\" name=\"EquationSource\"\u003e\n$$\\:{Y}_{i}={\\beta\\:}_{0}+{\\beta\\:}_{1}{R}_{\\varvec{i}}+{\\eta\\:}_{c}{\\widehat{X}}_{i}+{\\beta\\:}_{2}{I}_{\\varvec{i}}{+\\epsilon\\:}_{i}$$\u003c/div\u003e\u003c/div\u003e\u003c/p\u003e \u003cp\u003eHere \u003cspan class=\"InlineEquation\"\u003e\u003cspan class=\"mathinline\"\u003e\\(\\:{Y}_{i}\\)\u003c/span\u003e\u003c/span\u003e captures outcome variable: average length of employment of all employees in last financial year. The LATE is captured by the coefficient \u003cspan class=\"InlineEquation\"\u003e\u003cspan class=\"mathinline\"\u003e\\(\\:{\\eta\\:}_{c}\\)\u003c/span\u003e\u003c/span\u003e. In short, this study employs two-stage least squares estimation to calculate the LATE. In the fuzzy Regression Discontinuity Design (RDD) context, the LATE is determined by the ratio of the change in the outcome variable to the change in treatment probability.\u003c/p\u003e \u003c/div\u003e"},{"header":"4. Results and Analysis","content":"\u003cdiv id=\"Sec7\" class=\"Section2\"\u003e\n \u003ch2\u003e4.1 Main Results\u003c/h2\u003e\n \u003cp\u003eThe first-stage regression estimation from the two-stage least squares regression is presented in Table \u003cspan class=\"InternalRef\"\u003e2\u003c/span\u003e. The first-stage estimation reveals a statistically significant positive influence of a firm having childcare facilities, significant at the 1% level. The substantial positive effect of the instrumental variable on a firm with childcare facilities provides evidence of the validity of our instrumental variable, as it meets the relevance condition.\u003c/p\u003e\n \u003cdiv class=\"gridtable\"\u003e\n \u003cdiv align=\"char\" class=\"colspec\"\u003e\u003cbr\u003e\u003c/div\u003e\u0026nbsp;\u0026nbsp;\u003ctable id=\"Tab2\" border=\"1\"\u003e\n \u003ccaption language=\"En\"\u003e\n \u003cdiv class=\"CaptionNumber\"\u003eTable 2\u003c/div\u003e\n \u003cdiv class=\"CaptionContent\"\u003e\n \u003cp\u003eFirst-Stage Estimation Result\u003c/p\u003e\n \u003c/div\u003e\n \u003c/caption\u003e\n \u003cthead\u003e\n \u003ctr\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eInstrumental Variable\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eTreatment Variable\u003c/p\u003e\n \u003cp\u003eHaving Childcare facilities\u003c/p\u003e\n \u003c/th\u003e\n \u003c/tr\u003e\n \u003c/thead\u003e\n \u003ctbody\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eInstrumental Variable(=\u0026thinsp;1 if a firm has 50 or more employees)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"char\"\u003e\n \u003cp\u003e0.31***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eStandard Deviation\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"char\"\u003e\n \u003cp\u003e0.09\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tbody\u003e\n \u003ctfoot\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"2\"\u003e\u003cem\u003eNote\u003c/em\u003e: Significance levels where \u0026lowast;\u0026lowast;\u0026lowast; for p\u0026thinsp;\u0026lt;\u0026thinsp;0.01.\u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tfoot\u003e\n \u003c/table\u003e\n \u003c/div\u003e\n \u003cp\u003eIn Fig. \u003cspan class=\"InternalRef\"\u003e1\u003c/span\u003e, a notable jump is evident in the likelihood of receiving treatment precisely at the cutoff point of the running variable. The sharp increase just before the cutoff illustrates a sudden surge in the likelihood of a firm having childcare facilities at the cutoff. This jump further underscores the significance of the eligibility dummy as a pertinent instrumental variable.\u003c/p\u003e\n \u003cp\u003eTable\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e3\u003c/span\u003e reports the impact of having childcare facilities on employee retention. The table shows that having childcare facilities has increased length of employees by 6.56 months at 5% significance level. With covariates added, the coefficient becomes 6.43 months. The covariates included are sole proprietorship (=\u0026thinsp;1 if sole proprietorship), female ownership (=\u0026thinsp;1 if female has at least 50% ownership), number of employees at the start of the firm and Age of the firm.\u003c/p\u003e\n \u003cdiv class=\"gridtable\"\u003e\u0026nbsp;\u0026nbsp;\u003ctable id=\"Tab3\" border=\"1\"\u003e\n \u003ccaption language=\"En\"\u003e\n \u003cdiv class=\"CaptionNumber\"\u003eTable 3\u003c/div\u003e\n \u003cdiv class=\"CaptionContent\"\u003e\n \u003cp\u003eImpact of Being Affected by Air Strike on Food Related Outcomes\u003c/p\u003e\n \u003c/div\u003e\n \u003c/caption\u003e\n \u003cthead\u003e\n \u003ctr\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eVariables\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\" colspan=\"2\"\u003e\n \u003cp\u003eLength of Average Employment Last Year (Months)\u003c/p\u003e\n \u003c/th\u003e\n \u003c/tr\u003e\n \u003c/thead\u003e\n \u003ctbody\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(1)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(2)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eRD Estimate\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e6.56**\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e6.43**\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eStandard Deviation\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e2.74\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e2.57\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eCovariates\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eNo\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYes\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tbody\u003e\n \u003ctfoot\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\"\u003eNote: Significance levels where \u0026lowast;\u0026lowast; for p\u0026thinsp;\u0026lt;\u0026thinsp;0.05.\u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tfoot\u003e\n \u003c/table\u003e\n \u003c/div\u003e\n\u003c/div\u003e\n\u003cdiv id=\"Sec8\" class=\"Section2\"\u003e\n \u003ch2\u003e4.2 Tests related to Specification\u003c/h2\u003e\n \u003cp\u003eThe validity of the Fuzzy RDD relies on two key assumptions: firstly, the continuity of the assignment variable around the cutoff, and secondly, the continuity of relevant pretreatment covariates around the cutoff. To verify these assumptions, two primary tests were conducted within the RDD framework:\u003c/p\u003e\u003cspan\u003e\n \u003cp\u003e1. Assessing continuity in the running variable.\u003c/p\u003e\n \u003c/span\u003e \u003cspan\u003e\n \u003cp\u003e2. Examining continuity in the pretreatment covariates.\u003c/p\u003e\n \u003c/span\u003e\n \u003cp\u003eIn addition, the third test checks whether there is any discontinuity of outcome variable at non-discontinuity points because checking continuity of outcome variable at non-discontinuity points is important to verify validity of the original cutoff.\u003c/p\u003e\n \u003cdiv id=\"Sec9\" class=\"Section3\"\u003e\n \u003ch2\u003e4.2.1. Assessing Continuity in the Running Variable\u003c/h2\u003e\n \u003cp\u003eThe reliability of the RDD setup is brought into question if there is a substantial spike observed at the cutoff of the assignment variable. To address this concern, the Cattaneo (2020) test was employed to investigate any significant increases in the conditional density of the assignment variable. This test utilized local polynomial density estimators, and the p-value is 0.16, confirming the absence of any significant spikes in the density of the assignment variable at the cutoff point. Figure \u003cspan class=\"InternalRef\"\u003e2\u003c/span\u003e shows the graph of the Cattaneo et al. (2020) test.\u003c/p\u003e\n \u003c/div\u003e\n \u003cdiv id=\"Sec10\" class=\"Section3\"\u003e\n \u003ch2\u003e4.2.2. Examining Continuity in the Pretreatment Covariates\u003c/h2\u003e\n \u003cp\u003eIn the Regression Discontinuity framework, it is crucial to ensure the continuity of pertinent pretreatment covariates. Hence, it is imperative to test whether there are any abrupt changes in these covariates around the cutoff point. We examined pretreatment covariates and found no significant difference in terms of the covariates around 50 employees of a firm. As indicated in Table \u003cspan class=\"InternalRef\"\u003e4\u003c/span\u003e, the RD estimates of these pretreatment covariates did not exhibit statistical significance, suggesting that there were no significant changes in the covariates around the cutoff of the running variable. Consequently, it can be concluded that the relevant pretreatment covariates remained continuous around the cutoff point.\u0026nbsp;\u003c/p\u003e\n \u003ctable id=\"Tab4\" border=\"1\"\u003e\n \u003ccaption language=\"En\"\u003e\n \u003cdiv class=\"CaptionNumber\"\u003eTable 4\u003c/div\u003e\n \u003cdiv class=\"CaptionContent\"\u003e\n \u003cp\u003eChecking for discontinuity in covariates\u003c/p\u003e\n \u003c/div\u003e\n \u003c/caption\u003e\n \u003cthead\u003e\n \u003ctr\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eCovariates\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eRegression Discontinuity around the cutoff\u003c/p\u003e\n \u003c/th\u003e\n \u003c/tr\u003e\n \u003c/thead\u003e\n \u003ctbody\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eSole proprietorship\u003c/p\u003e\n \u003cp\u003e(=\u0026thinsp;1 if Sole proprietorship)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.04\u003c/p\u003e\n \u003cp\u003e(0.09)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eFemale Ownership\u003c/p\u003e\n \u003cp\u003e(=\u0026thinsp;1 if female has at least 50% ownership)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.01\u003c/p\u003e\n \u003cp\u003e(0.04)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eNo of Employees at the start of the firm\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e5.73\u003c/p\u003e\n \u003cp\u003e(6.83)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eNo of Employees 3 years ago\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.13\u003c/p\u003e\n \u003cp\u003e(2.31)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eAge of the firm\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e4.20\u003c/p\u003e\n \u003cp\u003e(2.82)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tbody\u003e\n \u003ctfoot\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"2\"\u003e\u003cem\u003eNote\u003c/em\u003e: The standard errors are in parentheses.\u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tfoot\u003e\n \u003c/table\u003e\n \u003cp\u003e\u003cbr\u003e\u003c/p\u003e\n \u003c/div\u003e\n \u003cdiv id=\"Sec11\" class=\"Section3\"\u003e\n \u003ch2\u003e4.2.3 Examining Continuity of Outcome Variables at Non-Discontinuity Points\u003c/h2\u003e\n \u003cp\u003eTo check continuity of outcome variable at non-discontinuity points, we conducted RD estimates with different placebo cutoffs, and the results are reported in Table \u003cspan class=\"InternalRef\"\u003e5\u003c/span\u003e. Table \u003cspan class=\"InternalRef\"\u003e5\u003c/span\u003e shows that RD estimates with other placebo cutoffs are not statistically significant and confirms robustness of the results in this study.\u003c/p\u003e\n \u003cp\u003e\u003c/p\u003e\n \u003ctable id=\"Tab5\" border=\"1\"\u003e\n \u003ccaption language=\"En\"\u003e\n \u003cdiv class=\"CaptionNumber\"\u003eTable 5\u003c/div\u003e\n \u003cdiv class=\"CaptionContent\"\u003e\n \u003cp\u003eChecking Continuity of Outcome Variables at Non-Discontinuity Points\u003c/p\u003e\n \u003c/div\u003e\n \u003c/caption\u003e\n \u003cthead\u003e\n \u003ctr\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eCutoff\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eLength of Average Employment Last Year (Months)\u003c/p\u003e\n \u003c/th\u003e\n \u003c/tr\u003e\n \u003c/thead\u003e\n \u003ctbody\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e10 Employees\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.72\u003c/p\u003e\n \u003cp\u003e(-0.81)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e20 Employees\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-1.35\u003c/p\u003e\n \u003cp\u003e(-0.61)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e30 Employees\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-1.24\u003c/p\u003e\n \u003cp\u003e(0.02)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e40 Employees\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.02\u003c/p\u003e\n \u003cp\u003e(0.94)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tbody\u003e\n \u003ctfoot\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"2\"\u003e\u003cem\u003eNote\u003c/em\u003e: Significance levels are using robust method where \u0026lowast; for p\u0026thinsp;\u0026lt;\u0026thinsp;0.10, \u0026lowast;\u0026lowast; for p\u0026thinsp;\u0026lt;\u0026thinsp;0.05, and \u0026lowast;\u0026lowast;\u0026lowast; for p\u0026thinsp;\u0026lt;\u0026thinsp;0.01.\u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tfoot\u003e\n \u003c/table\u003e\n \u003cp\u003e\u003c/p\u003e\n \u003c/div\u003e\n\u003c/div\u003e\n\u003cdiv id=\"Sec12\" class=\"Section2\"\u003e\n \u003ch2\u003e4.3 Sensitivity Analysis\u003c/h2\u003e\n \u003cp\u003eThis study tests sensitivity of the result to different bandwidths, reported in Table \u003cspan class=\"InternalRef\"\u003e6\u003c/span\u003e. The results show that childcare facilities increase employment retention, which is consistent with our main result. The sensitivity analysis of the regression discontinuity design (RDD) demonstrates that the estimated impact of the treatment on the average length of employment last year is consistently positive and statistically significant across all bandwidths. The estimated effects range from 5.87 to 6.43 months as the bandwidth increases from 60 to 100. This consistency in both magnitude and significance indicates that the treatment robustly increases average employment duration by roughly six months, regardless of the chosen bandwidth. The stability of the results across different bandwidths suggests that the findings are not sensitive to the specific choice of bandwidth, reinforcing the reliability of the estimated treatment effect.\u003c/p\u003e\n \u003ctable id=\"Tab6\" border=\"1\" class=\"fr-table-selection-hover\"\u003e\n \u003ccaption language=\"En\"\u003e\n \u003cdiv class=\"CaptionNumber\"\u003eTable 6\u003c/div\u003e\n \u003cdiv class=\"CaptionContent\"\u003e\n \u003cp\u003eSensitivity Analysis with Different Bandwidths\u003c/p\u003e\n \u003c/div\u003e\n \u003c/caption\u003e\n \u003cthead\u003e\n \u003ctr\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eBandwidth\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eLength of Average Employment Last Year (Months)\u003c/p\u003e\n \u003c/th\u003e\n \u003c/tr\u003e\n \u003c/thead\u003e\n \u003ctbody\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e60\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e6.25**\u003c/p\u003e\n \u003cp\u003e(2.63)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e70\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e5.87**\u003c/p\u003e\n \u003cp\u003e(2.50)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e80\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e6.01**\u003c/p\u003e\n \u003cp\u003e(2.55)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e90\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e6.24**\u003c/p\u003e\n \u003cp\u003e(2.67)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e100\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e6.43**\u003c/p\u003e\n \u003cp\u003e(2.81)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tbody\u003e\n \u003ctfoot\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"2\"\u003e\u003cem\u003eNote\u003c/em\u003e: Significance levels are using robust method where \u0026lowast; for p\u0026thinsp;\u0026lt;\u0026thinsp;0.10, \u0026lowast;\u0026lowast; for p\u0026thinsp;\u0026lt;\u0026thinsp;0.05, and \u0026lowast;\u0026lowast;\u0026lowast; for p\u0026thinsp;\u0026lt;\u0026thinsp;0.01.\u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tfoot\u003e\n \u003c/table\u003e\n \u003cp\u003e\u003c/p\u003e\n \u003cp\u003e\u003cbr\u003e\u003c/p\u003e\n\u003c/div\u003e"},{"header":"5. Discussion","content":"\u003cp\u003eThe study's findings provide a clear understanding that employer-sponsored childcare facilities have a profound impact on employee retention in Indian firms. Using the regulatory threshold introduced by the Maternity Benefit (Amendment) Act, 2017 as a quasi-experimental setting, the analysis shows that firms providing childcare experience an average increase of approximately 6.5 months in employee tenure. This effect remains strong and consistent across robustness checks, placebo cutoffs, and multiple bandwidth specifications, reinforcing the reliability of the Fuzzy Regression Discontinuity Design used in this study.\u003c/p\u003e \u003cp\u003eThe result advances childcare literature in several perspectives. Most previous studies have examined childcare from a public policy perspective, primarily focusing on how community or state-based support for childcare programs influences women\u0026rsquo;s decisions to enter the labour market (e.g., Berlinski and Galiani, \u003cspan citationid=\"CR8\" class=\"CitationRef\"\u003e2007\u003c/span\u003e; Baker et al., \u003cspan citationid=\"CR5\" class=\"CitationRef\"\u003e2008\u003c/span\u003e; Brilli et al., \u003cspan citationid=\"CR13\" class=\"CitationRef\"\u003e2016\u003c/span\u003e). Moreover, the above-referenced studies have shown that affordable childcare increases women\u0026rsquo;s participation, and this is not limited to situations where women remain with the same employer. In contrast, this study altered the focus from labour force entry to employee retention within firms, addressing an overlooked question in the literature. Past studies examining the specific subject of employer-sponsored childcare have been exploratory and correlational. Early studies suggested that parents experienced less absenteeism or higher return-to-work rates (Goff et al., \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e1990\u003c/span\u003e; Glass \u0026amp; Riley, \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e1998\u003c/span\u003e); however, these studies could not account for the possibility that childcare was offered in firms that were already more effective at retaining employees. Miller (\u003cspan citationid=\"CR44\" class=\"CitationRef\"\u003e1984\u003c/span\u003e) suggested that the evidence linking employer-sponsored childcare to turnover was inconclusive, even if a positive relationship existed. This study utilizes a legally imposed threshold and imperfect compliance to address the self-selection concerns that have constrained earlier studies. The present study provides a causal estimate, for the first time in the Indian context, of the effect of childcare on retention. This study provides strong evidence that childcare facilities can have a significant impact on employee retention.\u003c/p\u003e \u003cp\u003eThe study's findings further align with Human Capital Theory (Rees, \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e1965\u003c/span\u003e), which characterizes the skills, experiences, and firm-specific knowledge of employees as valuable assets that organizations naturally want to protect. When employers invest in family-supportive benefits, such as childcare, they facilitate employee retention\u0026mdash;not only by increasing job satisfaction and reducing work\u0026ndash;family conflict, but also by supporting employees (especially mothers) in remaining within the organization and leveraging the human capital they have accumulated. Recent meta-analytic and large-scale studies have demonstrated that family-friendly policies and supports are associated with higher levels of commitment, lower turnover intentions, and increased retention (Blom et al., \u003cspan citationid=\"CR11\" class=\"CitationRef\"\u003e2025\u003c/span\u003e; Butts et al., 2013). Thus, it is reasonable to interpret the estimated increase in mean tenure of approximately 6.5 months as a tangible benefit from family-friendly employer investments in human capital: employer-funded childcare helps preserve the firm-specific human capital of employees, which lowers replacement and training costs for employers, and strengthens attachment over the long term between the employee and employer.\u003c/p\u003e \u003cp\u003eIn India, where childcare scarcity is a well-documented barrier to women's continued employment (Chaudhary \u0026amp; Verick, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e2014\u003c/span\u003e; Deshpande \u0026amp; Kabeer, \u003cspan citationid=\"CR22\" class=\"CitationRef\"\u003e2019\u003c/span\u003e), the study's findings are particularly notable. The findings suggest that even at a time when public childcare may not be guaranteed, employer-based childcare may help stabilize the workforce. This study contributes new knowledge to labour economics, gender studies, and organizational studies, demonstrating that childcare policies are not only socially significant but also have economic value for firms that require experience and tacit knowledge from employees.\u003c/p\u003e"},{"header":"6. Implications","content":"\u003cp\u003eThe findings of this study provide causal evidence that employer-sponsored childcare supports improved employee retention, offering valuable information for policymakers seeking to promote women's labour force attachment and firm stability. The Maternity Benefit (Amendment) Act, 2017 requires firms with 50 or more employees to provide access to childcare, but compliance is not uniform, especially among MSMEs. The retention gain demonstrates that childcare is not only an employee welfare program but also a human capital investment that reduces turnover and retains firm-specific skills, resulting in an average increase in retention of approximately 6.5 months.\u003c/p\u003e \u003cp\u003eFor policymakers, this research highlights the importance of strengthening compliance mechanisms and exploring the potential for incentive-based approaches (e.g., tax credits, subsidies, or co-financing of childcare facilities) to support smaller firms. These types of incentives are particularly salient in India, where access to public childcare remains low, and childcare constraints are an important reason for women leaving the labour market altogether (Chaudhary and Verick, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e2014\u003c/span\u003e; Deshpande and Kabeer, \u003cspan citationid=\"CR22\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). Expanding employer-supported childcare provision can complement government-funded childcare programs and further support related goals for gender equity and labour force participation. Policymakers could investigate cluster-level or community-based approaches to childcare provision, particularly in industrial zones and areas with a high density of MSMEs, to reduce implementation burdens and facilitate equal access to high-quality childcare.\u003c/p\u003e \u003cp\u003eFrom a managerial perspective, the paper demonstrates that providing workplace childcare generates organizational benefits. Employee tenure is expected to increase with the availability of childcare, resulting in lower costs for the organization from recruiting, training, and knowledge loss (Boushey \u0026amp; Glynn, \u003cspan citationid=\"CR12\" class=\"CitationRef\"\u003e2012\u003c/span\u003e; Deresse et al., \u003cspan citationid=\"CR21\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). The provision of childcare, which helps reduce work\u0026ndash;family conflict and assists with employee transitions, improves organizational commitment and reduces turnover intention, aligning with the long-term goal of HR (Kossek et al., \u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2011\u003c/span\u003e; Allen et al., \u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2013\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eFrom an industry perspective, the findings contribute to a deeper understanding of the greater economic value associated with the provision of childcare services. Industries with a large share of female employment or a workforce that requires intensive training would potentially have far-reaching effects from the stabilization of a trained workforce. Childcare services enable an efficient workforce to remain engaged in labour with reduced risk of skill loss and other productivity impairments, while also allowing businesses to maximize their productive capacity (Nataraj et al., \u003cspan citationid=\"CR48\" class=\"CitationRef\"\u003e2020\u003c/span\u003e). Childcare services are particularly valuable for industries where the knowledge of individuals is crucial to operations, as well as for those that rely on stable production cycles.\u003c/p\u003e"},{"header":"7. Limitations and Future Research Scope","content":"\u003cp\u003eWhile this study provides causal evidence of the retention effects of employer-sponsored childcare, it has several limitations to be noted. \u003cem\u003eFirst\u003c/em\u003e, the Fuzzy Regression Discontinuity Design only identifies effects for businesses at or near the 50-employee threshold, which limits the generalizability to either very small or very large firms (Cattaneo et al., 2019). Future research could employ complementary causal approaches to investigate the effects of employer-sponsored childcare on employee retention across a broader range of organizational sizes and contexts. \u003cem\u003eSecond\u003c/em\u003e, the cross-sectional Enterprise Survey data limit the analysis to short-term retention; using longitudinal datasets would allow us to assess long-term career pathways, transitions after parental leave, and the acquisition of firm-specific human capital (Mah et al., \u003cspan citationid=\"CR41\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). \u003cem\u003eThird\u003c/em\u003e, retention is assessed solely based on average tenure, thereby eliminating any aspects related to absenteeism, productivity, job satisfaction, and employee wellness, all of which are factors that would have been responsive to family-supportive benefits (Glass and Riley, \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e1998\u003c/span\u003e; Goff et al., \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e1990\u003c/span\u003e). \u003cem\u003eFourth\u003c/em\u003e, the data provided no insight into the quality of a parent\u0026rsquo;s childcare arrangements, nor whether parents utilized any kind of childcare, despite research showing that quality influences parents\u0026rsquo; decisions on employment (Brilli et al., \u003cspan citationid=\"CR13\" class=\"CitationRef\"\u003e2016\u003c/span\u003e). Future research should incorporate employee-level microdata, analyze sectoral diversity, and identify gender-differentiated impacts, given that women bear a disproportionate share of childcare responsibilities (UNICEF, 2023; Chaudhary and Verick, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e2014\u003c/span\u003e). Cost-benefit analyses and research that combine childcare with complementary human resources policies would also help people better understand employer-supported childcare, thereby enhancing retention and inclusion in the workforce.\u003c/p\u003e"},{"header":"8. Conclusion","content":"\u003cp\u003eThis research establishes causal evidence that employer-sponsored childcare increases employee retention. By employing a Fuzzy Regression Discontinuity Design around the 50-employee cutoff under the Maternity Benefit (Amendment) Act, 2017, the analysis shows that childcare increases average employee tenure by roughly 6.5 months. Furthermore, the findings demonstrate that childcare should be viewed as a strategic capital investment in human capital, rather than a welfare or employee expense; this has important ramifications for firms trying to reduce turnover, and in earlier studies, to mitigate the loss of firm-specific capital. In addition, with limited public childcare and declining female labour participation, employer-supported childcare is one avenue to improve retention and foster gender inclusion.\u003c/p\u003e"},{"header":"Declarations","content":"\u003ch2\u003eEthics approval and consent to participate:\u003c/h2\u003e\n\u003cp\u003eNot applicable.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eConsent for publication:\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eNot applicable.\u003c/p\u003e\n\u003ch2\u003eAuthor Contribution\u003c/h2\u003e\n\u003cp\u003eM.A.B., P.S. and M.O.G. wrote the main manuscript text. M.K.B.K. and S.M.S reviewed the manuscript\u003c/p\u003e\n\u003ch2\u003eData Availability\u003c/h2\u003e\n\u003cp\u003eThe data are available at the following URL: https://www.enterprisesurveys.org/en/data.\u003c/p\u003e"},{"header":"References","content":"\u003col\u003e\n\u003cli\u003eAkgunduz, Y. E., \u0026amp; Plantenga, J. (2014). Childcare and maternal employment: A meta-analysis. \u003cem\u003eJournal of Economic Surveys, 28\u003c/em\u003e(3), 446\u0026ndash;467. https://doi.org/10.1111/joes.12045\u003c/li\u003e\n\u003cli\u003eAllen, T. D., French, K. A., Dumani, S., \u0026amp; Shockley, K. M. (2013). Dispositional variables and work\u0026ndash;family conflict: A meta-analysis. \u003cem\u003eJournal of Vocational Behavior, 80\u003c/em\u003e(1), 17\u0026ndash;26. https://doi.org/10.1016/j.jvb.2011.04.004\u003c/li\u003e\n\u003cli\u003eAsghar, S., \u0026amp; Zulfiqar, N. (2025). Workplace bullying and turnover intention among industrial employees: job burnout as a mediator. 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(2023). \u003cem\u003eWorld development indicators: Female labor force participation rate (India)\u003c/em\u003e. https://data.worldbank.org\u003c/li\u003e\n\u003cli\u003eZając, T., Magda, I., Bożykowski, M., Chłoń-Domińczak, A., \u0026amp; Jasiński, M. (2025). Gender pay gaps across STEM fields of study. Studies in Higher Education, 50(1), 126-139.\u003c/li\u003e\n\u003c/ol\u003e"}],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":true,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":false,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":false,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Child Care, Employee Retention, Causality, Strategy, Employer-Sponsored","lastPublishedDoi":"10.21203/rs.3.rs-8564553/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8564553/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eFirms increasingly recognize that retaining skilled workers is more valuable than continuously replacing them. Employer-sponsored childcare, therefore, serves as a strategic human resource investment aimed at reducing turnover and retaining valuable, trained employees. However, empirical evidence on the impact of employer-sponsored childcare facilities on employee retention remains limited. This study examines the causal effect of employer-provided childcare facilities on employee retention in India using a Fuzzy Regression Discontinuity Design. The analysis leverages the Maternity Benefit (Amendment) Act 2017, which mandates firms with 50 or more employees to provide access to a nearby childcare facility, treating the number of employees in the previous financial year as the running variable. Using data from 1,170 firms, the study measures the average length of employment in the previous financial year as the outcome variable. The results indicate that having employer-sponsored childcare facilities increases the average employment duration by 6.56 months. These findings underscore the significance of employer-sponsored childcare as a valuable policy tool for enhancing employee retention. Grounded in Human Capital Theory (Rees, \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e1965\u003c/span\u003e), this study suggests that investing in employees enhances retention.\u003c/p\u003e","manuscriptTitle":"The Impact of Employer-Sponsored Childcare Facilities on Employee Retention: A Fuzzy Regression Discontinuity Approach","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2026-01-30 18:24:08","doi":"10.21203/rs.3.rs-8564553/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"fd8ce073-7083-42ad-b44d-163e1b09ca82","owner":[],"postedDate":"January 30th, 2026","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[],"tags":[],"updatedAt":"2026-03-05T04:25:02+00:00","versionOfRecord":[],"versionCreatedAt":"2026-01-30 18:24:08","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-8564553","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-8564553","identity":"rs-8564553","version":["v1"]},"buildId":"XKTyCvWXoU3ODBz1xrDgd","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}