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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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Keywords: fertility; financial incentives; employment;

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Citations

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Cited by:
  1. 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).
  2. Myck, Michal & Kurowska, Anna & Kundera, Michał, 2013. "Financial Support for Families with Children and its Trade-offs: Balancing Redistribution and Parental Work Incentives," IZA Discussion Papers 7506, Institute for the Study of Labor (IZA).
  3. Alexander Bick, 2010. "The Quantitative Role of Child Care for Fertility and Female Labor Force Participation," 2010 Meeting Papers, Society for Economic Dynamics 892, Society for Economic Dynamics.
  4. REINSTADLER Anne, 2011. "Luxembourg and France: Comparable Family Benefits, Comparable Fertility Levels?," CEPS/INSTEAD Working Paper Series 2011-65, CEPS/INSTEAD.
  5. Pia S. Schober & Christian Schmitt, 2013. "Day-Care Expansion and Parental Subjective Well-Being: Evidence from Germany," SOEPpapers on Multidisciplinary Panel Data Research 602, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. Verena Tobsch, 2013. "Betreuung von Schulkindern: ein weiterer Schlüssel zur Aktivierung ungenutzter Arbeitskräftepotenziale?," SOEPpapers on Multidisciplinary Panel Data Research 573, DIW Berlin, The German Socio-Economic Panel (SOEP).
  7. Johannes Geyer & Peter Haan & Katharina Wrohlich, 2014. "The Effects of Family Policy on Mothers' Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment," Discussion Papers of DIW Berlin 1366, DIW Berlin, German Institute for Economic Research.
  8. Bick, Alexander, 2011. "The quantitative role of child care for female labor force participation and fertility," MPRA Paper 31713, University Library of Munich, Germany.
  9. Robert Fenge & Lisa Stadler, 2014. "Three Family Policies to Reconcile Fertility and Labor Supply," CESifo Working Paper Series 4922, CESifo Group Munich.
  10. Vanleenhove, Pieter, 2013. "Full Childcare Coverage: Higher Maternal Labour Supply and Childcare Usage?," EUROMOD Working Papers em19/13, EUROMOD at the Institute for Social and Economic Research.
  11. Anna Lovasz & Agnes Szabo-Morvai, 2013. "Does Childcare Matter for Maternal Labor Supply? Pushing the limits of the Regression Discontinuity Framework," Budapest Working Papers on the Labour Market, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences 1313, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  12. 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.
  13. C. Katharina Spieß, 2011. "Vereinbarkeit von Familie und Beruf – wie wirksam sind deutsche „Care Policies“?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, Verein für Socialpolitik, vol. 12(s1), pages 4-27, 05.
  14. Pia S. Schober & C. Katharina Spieß, 2014. "Local Day-Care Quality and Maternal Employment: Evidence from East and West Germany," SOEPpapers on Multidisciplinary Panel Data Research 649, DIW Berlin, The German Socio-Economic Panel (SOEP).
  15. Mizuochi, Masaaki, 2012. "The Effect of Work-family Balance Policy on Childbirth and Women's Work," Discussion Paper Series, Institute of Economic Research, Hitotsubashi University 575, Institute of Economic Research, Hitotsubashi University.
  16. repec:diw:diwwpp:dp1315 is not listed on IDEAS
  17. Helmut Mahringer & Christine Zulehner, 2012. "Child-Care Costs and Mothers' Employment Rates. An Empirical Analysis for Austria," WIFO Working Papers, WIFO 429, WIFO.

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