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Labor Supply and the Demand for Child Care: An Intertemporal Approach

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  • Junichi Minagawa
  • Thorsten Upmann
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    Abstract

    In this paper, we present a model of a one parent–one child household where parental decisions on labor supply, leisure, and the demand for private and public child care are simultaneously endogenized and intertemporally determined. We characterize the path of the optimal decisions and investigate the impact of various public child care fees and of the quality of public child care services on the parent’s time allocation and the child’s performance level. Our results show that different public child care policies may induce substantially diverging effects, and reveal that each policy frequently faces a trade off between an encouragement of labor supply and an enhancement of the child’s performance.

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    File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2006/wp-cesifo-2006-10/cesifo1_wp1819.pdf
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    Bibliographic Info

    Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1819.

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    Date of creation: 2006
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    Handle: RePEc:ces:ceswps:_1819

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    Related research

    Keywords: child care fees and services; demand for child care; intertemporal optimization; labor supply; leisure; parental time allocation; private and public child care; public child care policy;

    This paper has been announced in the following NEP Reports:

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    1. Susan L. Averett & H. Elizabeth Peters & Donald M. Waldman, . "Tax Credits, Labor Supply, and Child Care," University of Chicago - Population Research Center 92-9a, Chicago - Population Research Center.
    2. Xie, Danyang, 1991. "Increasing Returns and Increasing Rates of Growth," Journal of Political Economy, University of Chicago Press, vol. 99(2), pages 429-35, April.
    3. Gary S. Becker & Nigel Tomes, 1976. "Child Endowments, and the Quantity and Quality of Children," NBER Working Papers 0123, National Bureau of Economic Research, Inc.
    4. Theodore C. Bergstrom & S�ren Blomquist, . "The Political Economy of Subsidized Day Care," ELSE working papers 015, ESRC Centre on Economics Learning and Social Evolution.
    5. Lundholm, Michael & Ohlsson, Henry, 1998. "Who Takes Care of the Children? The quantity–quality model revisited," Working Paper Series 1998:23, Uppsala University, Department of Economics.
    6. Blau, David M & Robins, Philip K, 1988. "Child-Care Costs and Family Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 374-81, August.
    7. Connelly, Rachel, 1992. "The Effect of Child Care Costs on Married Women's Labor Force Participation," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 83-90, February.
    8. David C. Ribar, 1992. "Child Care and the Labor Supply of Married Women: Reduced Form Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 134-165.
    9. Danyang Xie, 2002. "On Time Inconsistency: A Technical Issue in Stackelberg Differential Games," Macroeconomics 0212004, EconWPA.
    10. Lundholm, M. & Ohlsson, H., 1995. "Wages for Women and Publicly Financed Day Care," Papers 1995-23, Uppsala - Working Paper Series.
    11. Charles Michalopoulos & Philip K. Robins & Irwin Garfinkel, 1992. "A Structural Model of Labor Supply and Child Care Demand," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 166-203.
    12. Becker, Gary S & Lewis, H Gregg, 1973. "On the Interaction between the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages S279-88, Part II, .
    13. David M. Blau & Alison P. Hagy, 1998. "The Demand for Quality in Child Care," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 104-146, February.
    14. Brink, Anna & Nordblom, Katarina, 2005. "Child-care quality and fee structure: Effects on labor supply and leisure composition," Working Papers in Economics 157, University of Gothenburg, Department of Economics.
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