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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, Anne

    ()
    (Ministry of Finance, Sweden)

  • Nordblom, Katarina

    ()
    (University of Gothenburg)

  • Wahlberg, Roger

    (University of Gothenburg)

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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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2748.

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Length: 39 pages
Date of creation: Apr 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2748

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Keywords: labor supply; redistribution; reform; child care; fees; child benefit;

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References

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Citations

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Cited by:
  1. Bargain, Olivier & Orsini, Kristian & Peichl, Andreas, 2012. "Comparing Labor Supply Elasticities in Europe and the US: New Results," IZA Discussion Papers 6735, Institute for the Study of Labor (IZA).
  2. Nicholas-James Clavet & Jean-Yves Duclos, 2012. "Le financement des services de garde des enfants: effets sur le travail, le revenu des familles, et les finances publiques," Cahiers de recherche 1216, CIRPEE.
  3. 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.
  4. 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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