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Taxing Childcare: Effects on Family Labor Supply and Children

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  • Christina Gathmann
  • Björn Sass

Abstract

Previous studies report a wide range of estimates for how female labor supply responds to childcare prices. We shed new light on this question using a reform that raised the prices of public daycare. Parents respond by reducing public daycare and increasing childcare at home. Parents also reduce informal childcare indicating that public daycare and informal childcare are complements. Female labor force participation declines and the response is strongest for single parents and low-income households. The short-run effects on cognitive and non-cognitive skills are mixed, but negative for girls. Spillover effects on older siblings suggest that the policy affects the whole household, not just targeted family members.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2012/wp-cesifo-2012-03/cesifo1_wp3776.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3776.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3776

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Keywords: childcare; labor supply; cognitive skills; family policy; Germany;

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References

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  1. Havnes, Tarjei & Mogstad, Magne, 2011. "Money for nothing? Universal child care and maternal employment," Journal of Public Economics, Elsevier, Elsevier, vol. 95(11), pages 1455-1465.
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  4. Havnes, Tarjei & Mogstad, Magne, 2009. "No Child Left Behind: Universal Child Care and Children's Long-Run Outcomes," Memorandum, Oslo University, Department of Economics 23/2009, Oslo University, Department of Economics.
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Citations

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Cited by:
  1. Felfe, Christina & Nollenberger, Natalia & Rodríguez-Planas, Núria, 2012. "Can't Buy Mommy's Love? Universal Childcare and Children's Long-Term Cognitive Development," IZA Discussion Papers 7053, Institute for the Study of Labor (IZA).
  2. Johannes Geyer & Peter Haan & Katharina Wrohlich, 2014. "The Effects of Family Policy on Mothers' Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment," Discussion Papers of DIW Berlin 1366, DIW Berlin, German Institute for Economic Research.
  3. Stefan Bauernschuster & Martin Schlotter, 2013. "Public Child Care and Mothers' Labor Supply - Evidence from Two Quasi-Experiments," CESifo Working Paper Series, CESifo Group Munich 4191, CESifo Group Munich.
  4. Kluve, Jochen & Schmitz, Sebastian, 2014. "Social Norms and Mothers' Labor Market Attachment: The Medium-Run Effects of Parental Benefits," IZA Discussion Papers 8115, Institute for the Study of Labor (IZA).
  5. Anita Fichtl & Timo Hener & Helmut Rainer, 2012. "Betreuungsgeld," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 65(21), pages 38-44, November.
  6. Jochen Kluve & Sebastian Schmitz, 2014. "Social Norms and Mothers’ Labor Market Attachment – The Medium-run Effects of Parental Benefits," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0481, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  7. Zimmermann, Klaus F., 2013. "Reflexionen zur Zukunft der Arbeit," IZA Standpunkte, Institute for the Study of Labor (IZA) 56, Institute for the Study of Labor (IZA).
  8. Helmut Rainer & Stefan Bauernschuster & Natalia Danzer & Anita Fichtl & Timo Hener & Christian Holzner & Janina Reinkowski, 2013. "Kindergeld und Kinderfreibeträge in Deutschland: Evaluierung der Auswirkungen auf familienpolitische Ziele," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 66(09), pages 28-36, 04.

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