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Arbeiten lohnt sich nicht - ein zweites Kind noch weniger

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  • Monika Bütler

    ()

Abstract

Child-care subsidies are meant to facilitate work for mothers with small children. The paper demonstrates that the predominant current subsidy scheme in Switzerland, which ties the subsidies to realized income (but not to potential income), creates strongly negative work incentives especially for well qualified women. With the example of the city of Zürich it is shown that it does not pay off for mothers to work more than one or two days per week, as any increase in the hours worked leads to a more than proportional rise in child-care costs. For more than one child, the effective total marginal tax rate, including child-care expenditures, can well exceed 100%. This effect is primarily due to the endogenous pricing of child-care facilities implied by the scheme, and much less to progressive taxation.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/dp2006/DP05_Bu.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2006 with number 2006-05.

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Length: 15 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:usg:dp2006:2006-05

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Keywords: Child Care Subsidies; Female Labour Supply; Fertility;

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