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Maximum fee vs child benefit: A welfare analysis of Swedish child-care fee reform

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Author Info
Brink, Anna () (Division for Tax Policy Analysis)
Nordblom, Katarina () (Department of Economics, School of Business, Economics and Law, Göteborg University)
Wahlberg, Roger () (Department of Economics, School of Business, Economics and Law, Göteborg University)

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Abstract

The effects of a recent Swedish child-care fee reform are compared with those of an alternative reform, increased child benefits. The fee reform implied considerably decreased fees and was intended to increase both labor supply among parents and their economic well-being. We estimate labor supply effects using a discrete choice labor supply model, and simulate behavioral responses to the changes. We find positive, but small, effects on labor supply from reduced fees, while increased child benefits would make single mothers decrease their labor supply. On the other hand, increased child benefits would make income distribution more equal. We make a social welfare comparison and conclude that for plausible values of inequality aversion, the alternative reform would have been preferable to the implemented fee reform.

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File URL: http://hdl.handle.net/2077/3273
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Publisher Info
Paper provided by Göteborg University, Department of Economics in its series Working Papers in Economics with number 250.

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Length: 36 pages
Date of creation: 03 Apr 2007
Date of revision:
Publication status: Published in International Tax and Public Finance, 2007, pages 457-480.
Handle: RePEc:hhs:gunwpe:0250

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Postal: Department of Economics, School of Business, Economics and Law, Göteborg University Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Related research
Keywords: Labor supply; Redistribution; Reform; Child care; Fees; Child benefit;

Other versions of this item:

Find related papers by JEL classification:
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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(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.)

  1. 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)
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