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Labor Supply and Child Care Choices in a Rationed Child Care Market

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  • Wrohlich, Katharina

    ()
    (DIW Berlin)

Abstract

In this paper, I suggest an empirical framework for the analysis of mothers' labor supply and child care choices, explicitly taking into account access restrictions to subsidized child care. This is particularly important for countries such as Germany, where subsidized child care is rationed and private child care is only available at considerably higher cost. I use a discrete choice panel data model controlling for unobserved heterogeneity to simultaneously estimate labor supply and the demand for child care of German mothers with at least one child under the age of seven years. The model can be used to evaluate different kinds of policy reforms, such as changes in the availability or costs of child care. Results from the illustrating policy simulations show that targeting public expenditures at an extension of child care slots has greater effects on the demand for child care as well as on maternal employment than a reduction of parents' fees to existing slots.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2053.

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Length: 31 pages
Date of creation: Mar 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2053

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Keywords: child care; labor supply; discrete choice; panel study; Germany;

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References

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  1. Ribar, D.C., 1993. "A Structural Model of Child Care and the Labor Supply of Married Women," Papers 5-93-1, Pennsylvania State - Department of Economics.
  2. Susan L. Averett & H. Elizabeth Peters & Donald M. Waldman, 1997. "Tax Credits, Labor Supply, And Child Care," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 125-135, February.
  3. Lokshin, Michael M., 1999. "Household childcare choices and women's work behavior in Russia," Policy Research Working Paper Series 2206, The World Bank.
  4. Immervoll, Herwig & Barber, David, 2006. "Can Parents Afford to Work? Childcare Costs, Tax-Benefit Policies and Work Incentives," IZA Discussion Papers 1932, Institute for the Study of Labor (IZA).
  5. Viktor Steiner & Katharina Wrohlich, 2006. "Introducing Family Tax Splitting in Germany: How Would It Affect the Income Distribution and Work Incentives," Discussion Papers of DIW Berlin 612, DIW Berlin, German Institute for Economic Research.
  6. repec:rus:hseeco:9882 is not listed on IDEAS
  7. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
  8. James J. Heckman, 1974. "Effects of Child-Care Programs on Women's Work Effort," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 136-169 National Bureau of Economic Research, Inc.
  9. Bick, Alexander, 2010. "The quantitative role of child care for female labor force participation and fertility," MPRA Paper 25474, University Library of Munich, Germany.
  10. Viktor Steiner & Katharina Wrohlich & Peter Haan & Johannes Geyer, 2008. "Documentation of the Tax-Benefit Microsimulation Model STSM: Version 2008," Data Documentation 31, DIW Berlin, German Institute for Economic Research.
  11. Siv Gustafsson & Frank Stafford, 1992. "Child Care Subsidies and Labor Supply in Sweden," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 204-230.
  12. Del Boca, Daniela & Vuri, Daniela, 2005. "Labor Supply and Child Care Costs: The Effect of Rationing," IZA Discussion Papers 1779, Institute for the Study of Labor (IZA).
  13. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  14. Wrohlich, Katharina, 2005. "The Excess Demand for Subsidized Child Care in Germany," IZA Discussion Papers 1515, Institute for the Study of Labor (IZA).
  15. Alan Duncan & Gillian Paull & Jayne Taylor, 2001. "Mothers' employment and the use of childcare in the UK," IFS Working Papers W01/23, Institute for Fiscal Studies.
  16. Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives: A Microsimulation Study for Germany," Discussion Papers of DIW Berlin 421, DIW Berlin, German Institute for Economic Research.
  17. Beblo, Miriam & Lauer, Charlotte & Wrohlich, Katharina, 2005. "Ganztagsschulen und Erwerbsbeteiligung von Müttern: Eine Mikrosimulationsstudie für Deutschland," ZEW Discussion Papers 05-93, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  18. James J. Heckrnan, 1974. "Effects of Child-Care Programs on Women's Work Effort," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 491-524 National Bureau of Economic Research, Inc.
  19. Blau, David M & Robins, Philip K, 1988. "Child-Care Costs and Family Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 374-81, August.
  20. Del Boca, Daniela & Locatelli, Marilena & Vuri, Daniela, 2004. "Child Care Choices by Italian Households," IZA Discussion Papers 983, Institute for the Study of Labor (IZA).
  21. Charles Michalopoulos & Philip K. Robins & Irwin Garfinkel, 1992. "A Structural Model of Labor Supply and Child Care Demand," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 166-203.
  22. David M. Blau & Alison P. Hagy, 1998. "The Demand for Quality in Child Care," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 104-146, February.
  23. Parera-Nicolau, Antonia & Mumford, Karen A., 2005. "Labour Supply and Childcare for British Mothers in Two-Parent Families: A Structural Approach," IZA Discussion Papers 1908, Institute for the Study of Labor (IZA).
  24. Lisa M. Powell, 2002. "Joint Labor Supply and Childcare Choice Decisions of Married Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 37(1), pages 106-128.
  25. Philippe Choné & David le Blanc & Isabelle Robert-Bobée, 2003. "Female Labor Supply and Child Care in France," CESifo Working Paper Series 1059, CESifo Group Munich.
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