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A Single Parent’s Labor Supply: Evaluating Different Child Care Fees within an Intertemporal Framework

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  • Minagawa Junichi

    (Faculty of Economics, Chuo University, Hachioji, Tokyo, Japan)

  • Upmann Thorsten

    (Mercator School of Management, University Duisburg-Essen, Duisburg, Germany)

Abstract

In this paper, we present a model of a one-parent, one-child household where parental decisions on labor supply, leisure, and the demand for parental and public child care are simultaneously endogenized and intertemporally determined. We characterize the path of the optimal decisions and investigate the effects of various public child care fees and of the quality of public child care services on the parent’s time allocation and the child’s performance level. Our results show that different public child care policies may induce substantially diverging effects and reveal that each policy frequently faces a trade off between an encouragement of labor supply and an enhancement of the child’s performance. In addition, we find that, from an efficiency perspective, an income-based fee levied on public child care services is dominated by both a flat fee and a use-based fee system.

Suggested Citation

  • Minagawa Junichi & Upmann Thorsten, 2014. "A Single Parent’s Labor Supply: Evaluating Different Child Care Fees within an Intertemporal Framework," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 14(1), pages 177-215, January.
    • Handle: RePEc:bpj:bejtec:v:14:y:2014:i:1:p:39:n:3
    DOI: 10.1515/bejte-2012-0026
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    More about this item

    Keywords

    child care fees and services; demand for child care; intertemporal optimization; labor supply; leisure; parental time allocation; parental and public child care; public child care policy;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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