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Childcare Use and Parents’ Labour Supply in Australia

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Author Info

  • Guyonne Kalb

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Wang-Sheng Lee

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

Based on data which are representative of the Australian population in 2002, this paper first analyses the demand for and cost of formal and informal childcare for couple and sole parent families, shedding light on factors which affect the demand for childcare. The predicted demand of formal childcare and the predicted costs of informal childcare arising from these models are then used to impute total childcare costs at different levels of labour supply. Finally, the predicted total costs are incorporated in the estimation procedure of structural labour supply models for couple and sole parent families. By making several extensions to the methodology adopted in Doiron and Kalb (2005a), who estimated similar models based on 1996 Australian data and which this paper largely replicates in terms of methodology, it is found that the average elasticities of labour supply with regard to the cost of childcare are quite similar to the earlier estimates. The elasticities remain at the lower end of the range found in the international literature with the exception of the elasticities for sole parents with preschool children and/or on relatively low wages

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Bibliographic Info

Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2007n13.

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Length: 33 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:iae:iaewps:wp2007n13

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  1. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
  2. Denise Doiron & Guyonne Kalb, 2002. "Demand for Childcare Services and Labour Supply in Australian Families," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(2), pages 204-213.
  3. Callan, T. & Soest, A.H.O. van, 1994. "Family labour supply and taxes in Ireland," Discussion Paper 1994-26, Tilburg University, Center for Economic Research.
  4. John Creedy & Guyonne Kalb & Rosanna Scutella, 2003. "Discrete Hours Labour Supply Modelling: Specification, Estimation and Simulation," Melbourne Institute Working Paper Series wp2003n21, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  5. M. Keane & R. Moffitt, . "A structural model of multiple welfare program participation and labor supply," Institute for Research on Poverty Discussion Papers 1080-96, University of Wisconsin Institute for Research on Poverty.
  6. Rammohan, Anu, 2004. "Child care and female employment decisions: A theoretical note," Working Papers 3, University of Sydney, School of Economics.
  7. Guyonne Kalb & Rosanna Scutella & Hsein Kew, 2002. "Estimation of Wage Equations in Australia: Allowing for Censored Observations of Labour Supply," Melbourne Institute Working Paper Series wp2002n26, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  8. Denise Doiron & Guyonne Kalb, 2004. "Demands for Childcare and Household Labour Supply in Australia," Melbourne Institute Working Paper Series wp2004n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  9. Anu Rammohan & Stephen Whelan, 2006. "Child Care Costs and the Employment Status of Married Australian Mothers," CEPR Discussion Papers 517, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  10. Guyonne Kalb, 2002. "Estimation of Labour Supply Models for Four Separate Groups in the Australian Population," Melbourne Institute Working Paper Series wp2002n24, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  11. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
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Cited by:
  1. Xiaodong Gong & Robert Breunig & Anthony King, 2010. "New estimates of the relationship between female labour supply and the cost, availability, and quality of child care," Economic Roundup, Treasury, Australian Government, issue 1, pages 51-62, April.
  2. Chikako Yamauchi, 2009. "The Availability of Child Care Centers, Perceived Search Costs and Parental Life Satisfaction," CEPR Discussion Papers 620, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  3. Ross Guest & Nick Parr, 2013. "Family policy and couples’ labour supply: an empirical assessment," Journal of Population Economics, Springer, vol. 26(4), pages 1631-1660, October.
  4. Robert Breunig & Joseph Mercante, 2010. "The Accuracy of Predicted Wages of the Non-Employed and Implications for Policy Simulations from Structural Labour Supply Models," The Economic Record, The Economic Society of Australia, vol. 86(272), pages 49-70, 03.
  5. Edwin van Gameren, 2013. "The Role of Economic Incentives and Attitudes in Participation and Childcare Decisions," Journal of Family and Economic Issues, Springer, vol. 34(3), pages 296-313, September.
  6. Xiaodong Gong & Robert Breunig & Anthony King, 2011. "Partnered women's labour supply and child care costs in Australia: Measurement error and the child care price," NATSEM Working Paper Series 11/13, University of Canberra, National Centre for Social and Economic Modelling.
  7. Yin King Fok & Sung-Hee Jeon & Roger Wilkins, 2009. "Does Part-Time Employment Help or Hinder Lone Mothers Movements into Full-Time Employment?," Melbourne Institute Working Paper Series wp2009n25, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  8. Guyonne Kalb & Thor Thoresen, 2010. "A comparison of family policy designs of Australia and Norway using microsimulation models," Review of Economics of the Household, Springer, vol. 8(2), pages 255-287, June.

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