The Political Economy of Subsidized Day Care

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The Political Economy of Subsidized Day Care

Author Info

Ted Bergstrom (University of California, Santa Barbara)
Soren Blomquist (Uppsala University)

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Ted Bergstrom

Abstract

This paper presents a theoretical model of political support for public provision of day care. In an economy where there are high taxes on wage income, selfish taxpayers with no children in the day care system may favor substantial public subsidies to day care because such subsidies induce mothers to join the labor force and hence pay income tax. Our model makes explicit quantitative predictions of the relation between the distribution of wages, theincome tax rate, and the subsidy rate for day care that maximizes net tax revenue from parents of small children. Applying parameter values from Sweden and the United States, we find that our model predicts a subsidy rate of between 50% and 100% for Sweden with its high tax rate on wages and between 15% and 30% for the U.S. with its lower tax rate on wages.

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Publisher Info
Paper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number 1995B.

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Date of creation: 01 Jun 1995
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Handle: RePEc:cdl:ucsbec:1995b

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Other versions of this item:

Article
- Bergstrom, Ted & Blomquist, Soren, 1996. "The political economy of subsidized day care," European Journal of Political Economy, Elsevier, vol. 12(3), pages 443-457, November. [Downloadable!] (restricted)
Paper
- Bergstrom, T. & Blomqust, S., 1993. "The Political Econmomy of Subsidized Day Care," Papers 1993-15, Uppsala - Working Paper Series.
- Bergstrom, T. & Blomquist, S., 1993. "The Political Economy of Subsidized Day Care," Papers 93-30, Michigan - Center for Research on Economic & Social Theory.
- Theodore C. Bergstrom & Sören Blomquist, . "The Political Economy of Subsidized Day Care," ELSE working papers 015, ESRC Centre on Economics Learning and Social Evolution.

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Blomquist, Sören & Micheletto, Luca, 2004. "Redistribution, In-Kind Transfers and Matching Grants when the Federal Government Lacks Information on Local Costs," Working Paper Series 2004:15, Uppsala University, Department of Economics. [Downloadable!]
Iñigo Iturbe Ormaetxe & Carmen Beviá, 2000. "Redistribution And Subsidies For Higher Education," Working Papers. Serie AD 2000-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
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- Carmen Bevia & I?go Iturbe-Ormaetxe, . "Redistribution and Subsidies for Higher Education," UFAE and IAE Working Papers 475.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
- Bevia, Carmen & Iturbe-Ormaetxe, Inigo, 2002. " Redistribution and Subsidies for Higher Education," Scandinavian Journal of Economics, Blackwell Publishing, vol. 104(2), pages 321-40, June. [Downloadable!] (restricted)
Rainald Borck & Katharina Wrohlich, 2008. "Preferences for Childcare Policies: Theory and Evidence," SOEPpapers 140, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
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- Borck, Rainald & Wrohlich, Katharina, 2008. "Preferences for Childcare Policies: Theory and Evidence," IZA Discussion Papers 3694, Institute for the Study of Labor (IZA). [Downloadable!]
- Rainald Borck & Katharina Wrohlich, 2008. "Preferences for Childcare Policies: Theory and Evidence," Discussion Papers of DIW Berlin 827, DIW Berlin, German Institute for Economic Research. [Downloadable!]
Aronsson, Thomas & Blomquist, Sören & Micheletto, Luca, 2007. "Where Should the Elderly Live and Who Should Pay for their Care? A Study in Demographics and Geographical Economics," Working Paper Series 2007:6, Uppsala University, Department of Economics. [Downloadable!]
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- Aronsson, Thomas & Blomquist, Sören & Micheletto, Luca, 2007. "Where Should the Elderly Live and Who Should Pay for their Care? A Study in Demographics and Geographical Economic," UmeÃ¥ Economic Studies 702, Umeå University, Department of Economics. [Downloadable!]
Anna Brink & Katarina Nordblom & Roger Wahlberg, 2007. "Maximum Fee vs. Child Benefit: A Welfare Analysis of Swedish Child-Care Fee Reform," IZA Discussion Papers 2748, Institute for the Study of Labor (IZA). [Downloadable!]
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- Brink, Anna & Nordblom, Katarina & Wahlberg, Roger, 2007. "Maximum fee vs child benefit: A welfare analysis of Swedish child-care fee reform," Working Papers in Economics 250, Göteborg University, Department of Economics. [Downloadable!]
Sanghamitra Bandyopadhyay & Joan Esteban, 2007. "Redistributive Taxation and Public Expenditures," Economics Series Working Papers 366, University of Oxford, Department of Economics. [Downloadable!]
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- Sanghamitra Bandyopadhyay & Joan Esteban, 2007. "Redistributive Taxation and PublicExpenditures," STICERD - Distributional Analysis Research Programme Papers 95, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
Dominique Henriet & Jean-Charles Rochet, 2006. "Is public health insurance an appropriate instrument for redistribution?," Annales d'Economie et de Statistique, ADRES, issue 83-84, pages 03, Juillet-D. [Downloadable!]
Other versions:
- Henriet, D. & Rochet, J.-C., 1998. "Is Public Health Insurance an Appropriate Instrument for Redistribution," Papers 98.512, Toulouse - GREMAQ.
Agell, Jonas & Persson, Mats, 1998. "Tax Arbitrage and Labor Supply," Seminar Papers 647, Stockholm University, Institute for International Economic Studies. [Downloadable!]
Robin Boadway & Firouz Gahvari, 2006. "Optimal Taxation with Consumption Time as a Leisure or Labor Substitute," Working Papers 1068, Queen's University, Department of Economics. [Downloadable!]
Other versions:
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Sherwin Rosen, 1995. "Public Employment, Taxes and the Welfare State in Sweden," NBER Working Papers 5003, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Sherwin Rosen, 1995. "Public Employment, Taxes and the Welfare State in Sweden," University of Chicago - George G. Stigler Center for Study of Economy and State 106, Chicago - Center for Study of Economy and State.
- 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. [Downloadable!]
Hanming Fang & Peter Norman, 2008. "Toward an Efficiency Rationale for the Public Provision of Private Goods," NBER Working Papers 13827, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Brink, Anna & Nordblom, Katarina, 2005. "Child-care quality and fee structure: Effects on labor supply and leisure composition," Working Papers in Economics 157, Göteborg University, Department of Economics. [Downloadable!]
Jonas Agell & Mats Persson, 1998. "Tax Arbitrage and Labor Supply," NBER Working Papers 6708, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Anna Brink & Katarina Nordblom & Roger Wahlberg, 2007. "Maximum fee versus child benefit: a welfare analysis of Swedish child-care fee reform," International Tax and Public Finance, Springer, vol. 14(4), pages 457-480, August. [Downloadable!] (restricted)
Lundholm , Michael & Ohlsson , Henry, 2002. "Negative Externalities in Day Care: Optimal Tax Policy Response," Working Papers in Economics 68, Göteborg University, Department of Economics. [Downloadable!]
Blomquist, Sören & Christiansen, Vidar, 1998. "The Political Economy of Publicly Provided Private Goods," Working Paper Series 1998:14, Uppsala University, Department of Economics. [Downloadable!]
Other versions:
- Blomquist, S. & Christiansen, V., 1998. "The Political Economy of Publicly Provided Private Goods," Papers 1998-14, Uppsala - Working Paper Series.
- Blomquist, Soren & Christiansen, Vidar, 1999. "The political economy of publicly provided private goods," Journal of Public Economics, Elsevier, vol. 73(1), pages 31-54, July. [Downloadable!] (restricted)

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