Final answer:
The decrease in childcare costs acts as a complement to labor, leading to a rightward shift in the labor supply curve, as it becomes more cost-effective for parents to work additional hours or enter the workforce.
Step-by-step explanation:
When the cost of childcare falls, we can expect an increase in the labor supply, leading to a rightward shift in the overall labor supply curve. Childcare is considered a complement of labor because having access to affordable childcare makes it easier for parents, especially mothers, to enter the workforce or to work more hours. As childcare costs decrease, working becomes more economical compared to staying at home, because the expense associated with going to work (paying for childcare) is reduced.
The labor supply curve is typically upward-sloping, meaning that as wages rise, the quantity of labor supplied also increases. Childcare cost is a non-wage determinant of labor supply. A reduction in childcare expenses has a similar effect on the labor supply as an increase in wages: it encourages more people to offer their labor or to work additional hours. However, labor supply is more elastic for some individuals, particularly for parents who weigh the costs of childcare against potential earnings.