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Labor Supply Heterogeneity and Demand for Child Care of Mothers with Young Children

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Author Info

  • Apps, Patricia

    ()
    (University of Sydney)

  • Kabátek, Jan

    ()
    (Tilburg University)

  • Rees, Ray

    ()
    (University of Munich)

  • van Soest, Arthur

    ()
    (Tilburg University)

Abstract

This paper introduces a static structural model of hours of market labor supply, time spent on child care and other domestic work, and bought in child care for married or cohabiting mothers with pre-school age children. The father's behavior is taken as given. The main goal is to analyze the sensitivity of hours of market work, parental child care, other household production and formal child care to the wage rate, the price of child care, taxes, benefits and child care subsidies. To account for the non-convex nature of the budget sets and, possibly, the household technology, a discrete choice model is used. The model is estimated using the HILDA dataset, a rich household survey of the Australian population, which contains detailed information on time use, child care demands and the corresponding prices. Simulations based on the estimates show that the time allocations of women with pre-school children are highly sensitive to changes in wages and the costs of child care. A policy simulation suggests that labor force participation and hours of market work would increase substantially in a fiscal system based solely on individual rather than joint taxation.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7007.

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Length: 39 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:iza:izadps:dp7007

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Keywords: time use; income tax; child care subsidies;

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References

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  1. Xiaodong Gong & Robert Breuing & Anthony King, 2011. "Partnered women’s labour supply and child care costs in Australia: measurement error and the child care price," CEPR Discussion Papers 652, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  2. Michael Baker & Jonathan Gruber & Kevin Milligan, 2006. "Universal Childcare, Maternal Labor Supply, and Family Well-Being," Working Papers id:547, eSocialSciences.
  3. Paul A. Ruud., 1988. "Extensions of Estimation Methods Using the EM Algorithm.," Economics Working Papers 8899, University of California at Berkeley.
  4. Soest, A.H.O. van & Stancanelli, E.G.F., 2010. "Does Income Taxation Affect Partners’ Household Chores?," Discussion Paper 2010-76, Tilburg University, Center for Economic Research.
  5. 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.
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  7. Blundell, Richard William & Gosling, Amanda & Ichimura, Hidehiko & Meghir, Costas, 2004. "Changes in the Distribution of Male and Female Wages Accounting for Employment Composition Using Bounds," CEPR Discussion Papers 4705, C.E.P.R. Discussion Papers.
  8. Apps,Patricia & Rees,Ray, 2009. "Public Economics and the Household," Cambridge Books, Cambridge University Press, number 9780521716284.
  9. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
  10. Soest, A.H.O. van & Das, J.W.M. & Gong, X., 2001. "A Structural Labour Supply Model with Flexible Preferences," Open Access publications from Tilburg University urn:nbn:nl:ui:12-119390, Tilburg University.
  11. Martin Burda & Matthew Harding & Jerry Hausman, 2008. "A Bayesian mixed logit-probit model for multinomial choice," CeMMAP working papers CWP23/08, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  12. Xiaodong Gong & Robert Breuing, 2011. "Estimating Net Child Care Price Elasticities of Partnered Women With Pre-School Children Using a Discrete Structural Labour Supply-Child Care Model," CEPR Discussion Papers 653, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  13. Xiaodong Gong & Robert Breunig, 2012. "Estimating net chid care price elasticities of partnered women with pre-school children using a discrete structural labour supply-child care model," Treasury Working Papers 2012-01, Treasury, Australian Government, revised Nov 2012.
  14. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555.
  15. Charlene M. Kalenkoski & David C. Ribar & Leslie S. Stratton, 2005. "Parental Child Care in Single-Parent, Cohabiting, and Married-Couple Families: Time-Diary Evidence from the United Kingdom," American Economic Review, American Economic Association, vol. 95(2), pages 194-198, May.
  16. Alberto Alesina & Andrea Ichino & Loukas Karabarbounis, 2011. "Gender-Based Taxation and the Division of Family Chores," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 1-40, May.
  17. Pacifico, Daniele, 2009. "Modelling Unobserved Heterogeneity in Discrete Choice Models of Labour Supply," MPRA Paper 19030, University Library of Munich, Germany.
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  20. Connelly, Rachel, 1992. "The Effect of Child Care Costs on Married Women's Labor Force Participation," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 83-90, February.
  21. Donald, Stephen G. & Hamermesh, Daniel S., 2009. "A structural model of the fixed time costs of market work," Economics Letters, Elsevier, vol. 104(3), pages 125-128, September.
  22. Denise Doiron & Guyonne Kalb, 2004. "Demands for Childcare and Household Labour Supply in Australia," Melbourne Institute Working Paper Series wp2004n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  23. Tom Kornstad & Thor Thoresen, 2007. "A discrete choice model for labor supply and childcare," Journal of Population Economics, Springer, vol. 20(4), pages 781-803, October.
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Cited by:
  1. 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.
  2. Lars Kunze & Nicolai Suppa, 2013. "Job Characteristics and Labour Supply," Ruhr Economic Papers 0418, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  3. Kabatek, J., 2013. "Iteration Capping For Discrete Choice Models Using the EM Algorithm," Discussion Paper 2013-019, Tilburg University, Center for Economic Research.
  4. Eliane El Badaoui & Eleonora Matteazzi, 2014. "To be a Mother, or not to be? Career and Wage Ladder in Italy and the UK," EconomiX Working Papers 2014-30, University of Paris West - Nanterre la Défense, EconomiX.
  5. Eleonora Matteazzi & Ariane Pailhé & Anne Solaz, 2013. "Does Part-Time Employment Widen the Gender Wage Gap? Evidence from Twelve European Countries," Working Papers 293, ECINEQ, Society for the Study of Economic Inequality.
  6. Colella, Fabrizio, 2014. "Women's Part-Time - Full-Time Wage Differentials in Europe: an Endogenous Switching Model," MPRA Paper 55287, University Library of Munich, Germany.

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