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A Regional Comparative Static CGE Analysis of Subsidized Child Care

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  • DAN S. RICKMAN
  • MARK C. SNEAD

Abstract

Concerns with the equity of societal income distribution typically underpin the provision of government subsidies to low-income households, in which such subsidies are commonly believed to reduce economic growth. Using a regional computable general equilibrium (CGE) model, this study examines the equity and growth aspects of subsidizing formal child care services for low-income households at the state level. The results suggest that state government subsidization of formal child care services does not necessarily reduce the level of economic activity, even when accounting for negative growth effects of tax increases required to finance the subsidies. The CGE model also reveals economic impacts on households and industry sectors not directly affected by the subsidies, impacts that would be omitted from a partial equilibrium microeconometric appraisal. Copyright 2007 Blackwell Publishing.

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  • Dan S. Rickman & Mark C. Snead, 2007. "A Regional Comparative Static CGE Analysis of Subsidized Child Care," Growth and Change, Wiley Blackwell, vol. 38(1), pages 111-139.
  • Handle: RePEc:bla:growch:v:38:y:2007:i:1:p:111-139
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-2257.2007.00355.x
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    Cited by:

    1. David Holland, 2010. "What happens when exports expand: some ideas for closure of regional computable general equilibrium models," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(2), pages 439-451, October.
    2. Mardones D., Cristián, 2012. "Chile: building a computable general equilibrium model with an application to the Bío Bío region," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.

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