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Can Child Care Policy Encourage Employment and Fertility? Evidence from a Structural Model

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  • Haan, Peter

    () (DIW Berlin)

  • Wrohlich, Katharina

    () (DIW Berlin)

Abstract

In this paper we develop a structural model of female employment and fertility which accounts for intertemporal feedback effects between the two outcomes. We identify the effect of financial incentives on the employment and fertility decision by exploiting variation in the tax and transfer system which differs by employment state and number of children. To this end we simulate in detail the effects of the tax and transfer system including child care costs. The model provides estimates of structural preferences of women which can be used to study the effect of various policy reforms. In particular, we show that increasing child care subsidies conditional on employment increases labor supply of all women as well as fertility of the childless and highly educated women.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4503.

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Length: 33 pages
Date of creation: Oct 2009
Date of revision:
Publication status: published in: Labour Economics, 2011, 18 (4), 498-512
Handle: RePEc:iza:izadps:dp4503

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Web page: http://www.iza.org

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Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
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Keywords: fertility; financial incentives; employment;

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References

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  1. Guy Laroque & Bernard Salanie, 2008. "Does Fertility Respond to Financial Incentives?," Discussion Papers 0708-15, Columbia University, Department of Economics.
  2. 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.
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Citations

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Cited by:
  1. Helmut Mahringer & Christine Zulehner, 2012. "Child-Care Costs and Mothers' Employment Rates. An Empirical Analysis for Austria," WIFO Working Papers 429, WIFO.
  2. Alexander Bick, 2010. "The Quantitative Role of Child Care for Fertility and Female Labor Force Participation," 2010 Meeting Papers 892, Society for Economic Dynamics.
  3. REINSTADLER Anne, 2011. "Luxembourg and France: Comparable Family Benefits, Comparable Fertility Levels?," CEPS/INSTEAD Working Paper Series 2011-65, CEPS/INSTEAD.
  4. C. Katharina Spieß, 2011. "Vereinbarkeit von Familie und Beruf – wie wirksam sind deutsche „Care Policies“?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(s1), pages 4-27, 05.
  5. Bick, Alexander, 2010. "The quantitative role of child care for female labor force participation and fertility," MPRA Paper 25474, University Library of Munich, Germany.
  6. Kurowska, Anna & Myck, Michal & Wrohlich, Katharina, 2012. "Family and Labor Market Choices: Requirements to Guide Effective Evidence-Based Policy," IZA Discussion Papers 6846, Institute for the Study of Labor (IZA).
  7. Mizuochi, Masaaki, 2012. "The Effect of Work-family Balance Policy on Childbirth and Women's Work," Discussion Paper Series 575, Institute of Economic Research, Hitotsubashi University.
  8. Rainald Borck, 2011. "Adieu Rabenmutter - The Effect of Culture on Fertility, Female Labour Supply, the Gender Wage Gap and Childcare," CESifo Working Paper Series 3337, CESifo Group Munich.

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