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Fertility, Female Labor Supply and Public Policy

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  • Patricia Apps
  • Ray Rees

Abstract

Historically, in virtually all developed economies there seems to be clear evidence of an inverse relationship between female labor supply and fertility. However, particularly in the last decade or so, the relationship across countries has been positive: for example countries like Germany, Italy and Spain with the lowest fertility rates also have the lowest female participation rates. They have accepted the hypothesis that the reason for this lies in the combined effects of a country’s tax system and system of child support, and we have sought to clarify this theoretically, using an extended version of the Galor-Weil model. The results suggest that countries with individual rather than joint taxation, and which support families through improved availability of alternatives to domestic child care, rather than through direct child payments, are likely to have both higher female labor supply and higher fertility. These results are strengthened when we take account of the heterogeneity among households that undoubtedly exists. [IZA Discussion Paper No. 409]

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Paper provided by eSocialSciences in its series Working Papers with number id:2754.

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Date of creation: Aug 2010
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Handle: RePEc:ess:wpaper:id:2754

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Keywords: Fertility; taxation; labor supply;

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  1. Alessandro Balestrino & Alessandro Cigno & Anna Pettini, 2002. "Endogenous Fertility and the Design of Family Taxation," International Tax and Public Finance, Springer, vol. 9(2), pages 175-193, March.
  2. Galor, Oded & Weil, David, 1995. "The Gender Gap, Fertility and Growth," CEPR Discussion Papers 1157, C.E.P.R. Discussion Papers.
  3. Francine D. Blau, 1996. "The Gender Pay Gap," NBER Working Papers 5664, National Bureau of Economic Research, Inc.
  4. Cigno, Alessandro, 1986. "Fertility and the Tax-Benefit System: A Reconsideration of the Theory of Family Taxation," Economic Journal, Royal Economic Society, vol. 96(384), pages 1035-51, December.
  5. Alessandro Cigno, 2001. "Comparative Advantage, Observability, and the Optimal Tax Treatment of Families with Children," International Tax and Public Finance, Springer, vol. 8(4), pages 455-470, August.
  6. Cigno, Alessandro & Pettini, Anna, 2002. "Taxing family size and subsidizing child-specific commodities?," Journal of Public Economics, Elsevier, vol. 84(1), pages 75-90, April.
  7. Robert Fenge & Wolfgang Ochel, 2001. "Die Vereinbarkeit von Familie und Beruf: der Schlüssel für eine kinderreiche Gesellschaft," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 54(12), pages 17-29, November.
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