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Child Care, Parental Labor Supply and Tax Revenue

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  • Andresen, Martin Eckhoff

    (University of Oslo)

  • Havnes, Tarjei

    (Norwegian Ministry of Finance)

Abstract

We study the impact of child care for toddlers on the labor supply of mothers and fathers in Norway. For identification, we exploit the staggered expansion across municipalities following a large reform from 2002. Our IV-estimates indicate that child care use causes an increase in the labor supply of mothers. Results suggest that cohabiting mothers move towards full time employment, while single mothers move to part time. Meanwhile, we find no impact for fathers or grandparents. We also find an increase in the taxes paid from cohabiting mothers, lending some support to the argument that parts of the cost of child care is offset by increased taxes.

Suggested Citation

  • Andresen, Martin Eckhoff & Havnes, Tarjei, 2018. "Child Care, Parental Labor Supply and Tax Revenue," IZA Discussion Papers 11576, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11576
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    Cited by:

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    2. Gozde Corekcioglu & Marco Francesconi & Astrid Kunze, 2022. "Expansions in Paid Parental Leave and Mothers' Economic Progress," CESifo Working Paper Series 10028, CESifo.
    3. Bicakova, Alena & Kaliskova, Klara, 2022. "Is Longer Maternal Care Always Beneficial? The Impact of a Four-Year Paid Parental Leave," IZA Discussion Papers 15640, Institute of Labor Economics (IZA).
    4. Bensnes, Simon & Huitfeldt, Ingrid & Leuven, Edwin, 2023. "Reconciling Estimates of the Long-Term Earnings Effect of Fertility," IZA Discussion Papers 16174, Institute of Labor Economics (IZA).
    5. Hermes, Henning & Krauß, Marina & Lergetporer, Philipp & Peter, Frauke & Wiederhold, Simon, 2022. "Early child care and labor supply of lower-SES mothers: A randomized controlled trial," DICE Discussion Papers 394, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    6. Brewer, Mike & Cattan, Sarah & Crawford, Claire & Rabe, Birgitta, 2022. "Does more free childcare help parents work more?," Labour Economics, Elsevier, vol. 74(C).
    7. Willage, Barton & Willén, Alexander, 2022. "Postpartum Job Loss: Transitory Effect on Mothers, Long-run Damage to Children," European Economic Review, Elsevier, vol. 150(C).
    8. Selina Gangl & Martin Huber, 2021. "From homemakers to breadwinners? How mandatory kindergarten affects maternal labour market outcomes," Papers 2111.14524, arXiv.org, revised Mar 2022.
    9. Gangl, Selina & Huber, Martin, 2021. "From homemakers to breadwinners? How mandatory kindergarten affects maternal labour market attachment," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203636, Verein für Socialpolitik / German Economic Association, revised 2021.
    10. Landais, Camille & Kleven, Henrik & Posch, Johanna & Steinhauer, Andreas & Zweimüller, Josef, 2020. "Do Family Policies Reduce Gender Inequality? Evidence from 60 Years of Policy Experimentation," CEPR Discussion Papers 15437, C.E.P.R. Discussion Papers.
    11. BOUSSELIN Audrey, 2019. "Expanding access to universal childcare: Effects on childcare arrangements and maternal employment," LISER Working Paper Series 2019-11, Luxembourg Institute of Socio-Economic Research (LISER).
    12. Pierre Pora, 2020. "Keep Working and Spend Less? Collective Childcare and Parental Earnings in France," EconomiX Working Papers 2020-29, University of Paris Nanterre, EconomiX.
    13. Thomas Benison & Isabelle Sin, 2023. "The wage cost of a lack of access to affordable childcare in Aotearoa New Zealand," Working Papers 23_02, Motu Economic and Public Policy Research.
    14. Franziska Zimmert, 2023. "Early child care and the employment potential of mothers: evidence from semi-parametric difference-in-differences estimation," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-22, December.
    15. Alexandre Laurin & Jacob Kim, 2019. "Mothers at Work: The Fiscal Implications of the Proposed Ontario Childcare Rebate," e-briefs 287, C.D. Howe Institute.
    16. Markussen, Simen & Røed, Knut, 2023. "The rising influence of family background on early school performance," Economics of Education Review, Elsevier, vol. 97(C).
    17. Huebener, Mathias & Pape, Astrid & Spiess, C. Katharina, 2020. "Parental labour supply responses to the abolition of day care fees," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 510-543.
    18. Emily Nix & Martin Eckhoff Andresen, 2019. "What Causes the Child Penalty? Evidence from Same Sex Couples and Policy Reforms," Discussion Papers 902, Statistics Norway, Research Department.
    19. Köppl-Turyna, Monika & Graf, Nikolaus, 2023. "Kinderbetreuung und Vereinbarkeit im internationalen Vergleich: Update des EcoAustria Scoreboard-Indikators," Policy Notes 54, EcoAustria – Institute for Economic Research.
    20. Jon H. Fiva & Max-Emil M. King, 2022. "Child Penalties in Politics," CESifo Working Paper Series 9611, CESifo.
    21. Peter Huber & Thomas Horvath & Klaus Nowotny & Margit Schratzenstaller & Silvia Rocha-Akis & Hedwig Lutz & Christine Mayrhuber, 2021. "Analysen zur rezenten Entwicklungen der Familie in Österreich. Beiträge des WIFO zum 6. Österreichischen Familienbericht 2009-2019," WIFO Studies, WIFO, number 67115, February.
    22. Padilla-Romo, María & Peluffo, Cecilia & Viollaz, Mariana, 2022. "Parents' Effective Time Endowment and Divorce: Evidence from Extended School Days," IZA Discussion Papers 15304, Institute of Labor Economics (IZA).
    23. Bastian, Jacob E. & Jones, Maggie R., 2021. "Do EITC expansions pay for themselves? Effects on tax revenue and government transfers," Journal of Public Economics, Elsevier, vol. 196(C).

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    More about this item

    Keywords

    child care; female labor supply; tax revenue; instrumental variables;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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