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Childcare Subsidies and Child Skill Accumulation in One- and Two-Parent Families

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  • Emily G. Moschini

Abstract

I examine the role of family structure and childcare subsidies in child skill accumulation. I establish empirically that skill accumulation is more responsive to childcare price for one-parent families than for two-parent families. I analyze the effects of childcare subsidies in a model featuring endogenous family formation, parental altruism, and a baseline subsidy resembling that of the United States. I find that eliminating this subsidy generates welfare losses of 1.63 percent of lifetime consumption, that equilibrium adjustments act to mitigate these losses, and that increasing uptake among one-parent families yields the highest welfare gains per additional recipient.

Suggested Citation

  • Emily G. Moschini, 2023. "Childcare Subsidies and Child Skill Accumulation in One- and Two-Parent Families," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(1), pages 475-516, January.
    • Handle: RePEc:aea:aejmac:v:15:y:2023:i:1:p:475-516
    DOI: 10.1257/mac.20200282
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    References listed on IDEAS

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    1. Anne Gauthier, 2007. "The impact of family policies on fertility in industrialized countries: a review of the literature," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 26(3), pages 323-346, June.
    2. Nicoletta Balbo & Francesco C. Billari & Melinda Mills, 2013. "Fertility in Advanced Societies: A Review of Research," European Journal of Population, Springer;European Association for Population Studies, vol. 29(1), pages 1-38, February.
    3. Herbst, Chris M., 2008. "Who are the eligible non-recipients of child care subsidies?," Children and Youth Services Review, Elsevier, vol. 30(9), pages 1037-1054, September.
    4. Brant Abbott, 2022. "Incomplete Markets and Parental Investments in Children," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 44, pages 104-124, April.
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    Cited by:

    1. Bastani, Spencer & Blomquist, Sören & Gahvari, Firouz & Micheletto, Luca & Tayibov, Khayyam, 2025. "Optimal housing taxation with land scarcity and maintenance: A Mirrleesian perspective," European Economic Review, Elsevier, vol. 178(C).
    2. Emily Moschini & Monica Tran-Xuan, 2025. "Family Policies and Child Skill Accumulation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 56, April.
    3. Paula Calvo & Ilse Lindenlaub & Ana Reynoso, 2024. "Marriage Market and Labour Market Sorting," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(6), pages 3316-3361.
    4. Martín García-Vázquez, 2025. "The Equilibrium Effects of State-Mandated Minimum Staff-to-Child Ratios," Working Papers 2024-025, Human Capital and Economic Opportunity Working Group.

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    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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