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The Effect of Child Care Subsidies: A Critique of the Rosen Model

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  • Iulie Aslaksen
  • Charlotte Koren
  • Marianne Stokstad
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    Abstract

    In an influential article, Sherwin Rosen (1997) argues that Swedish subsidies of child care services lead to a substantial misallocation of resources that slows economic growth. We offer two major reasons why Rosen's approach is flawed. First and foremost, he ignores the positive externalities of increasing the quality of child care, despite their clear relevance to his general equilibrium model. Second, he overlooks distributional impacts, despite evidence that child care subsidies redistribute the costs of children between men and women, rich and poor, young and old. By exploring these and a number of smaller problems with Rosen's model we hope to encourage the development of more systematic efforts to explore the effects of state support for child rearing.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/135457000337705
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Feminist Economics.

    Volume (Year): 6 (2000)
    Issue (Month): 1 ()
    Pages: 95-103

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    Handle: RePEc:taf:femeco:v:6:y:2000:i:1:p:95-103

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    Related research

    Keywords: Child Care; Subsidies; Deadweight Loss; Household Production; Welfare State;

    References

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    1. Sandmo, Agnar, 1990. "Tax Distortions and Household Production," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 78-90, January.
    2. Sherwin Rosen, 1997. "Public Employment, Taxes, and the Welfare State in Sweden," NBER Chapters, in: The Welfare State in Transition: Reforming the Swedish Model, pages 79-108 National Bureau of Economic Research, Inc.
    3. Ermisch, John F, 1988. "Purchased Child Care, Optimal Family Size and Mother's Employment," CEPR Discussion Papers 238, C.E.P.R. Discussion Papers.
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    Cited by:
    1. Datta Gupta, Nabanita & Smith, Nina & Verner, Mette, 2006. "Child Care and Parental Leave in the Nordic Countries: A Model to Aspire to?," IZA Discussion Papers 2014, Institute for the Study of Labor (IZA).
    2. Mary Eschelbach Hansen & Paul Jacobs, 2007. "Valuing Substitute Families:Financial Support for Foster and Adoptive Families," Working Papers 2007-04, American University, Department of Economics.

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