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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)

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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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Publisher 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
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Handle: RePEc:iae:iaewps:wp2007n13

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Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
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  1. Keane, Michael & Moffitt, Robert, 1998. "A Structural Model of Multiple Welfare Program Participation and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 553-89, August.
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  2. John Creedy & Guyonne Kalb, 2005. "Discrete Hours Labour Supply Modelling: Specification, Estimation and Simulation," Department of Economics - Working Papers Series 928, The University of Melbourne. [Downloadable!]
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  3. Guyonne Kalb & Rosanna Scutella, 2002. "Estimation of Wage Equations in Australia: Allowing for Censored Observations of Labour Supply," Melbourne Institute Working Paper Series wp2002n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
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  4. 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. [Downloadable!]
  5. Denise Doiron & Guyonne Kalb, 2005. "Demands for Child Care and Household Labour Supply in Australia," The Economic Record, The Economic Society of Australia, vol. 81(254), pages 215-236, 09. [Downloadable!] (restricted)
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  6. 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 Social Sciences, Australian National University. [Downloadable!]
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