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New estimates of the relationship between female labour supply and the cost, availability, and quality of child care

  • Xiaodong Gong

    (Treasury, Government of Australia)

  • Robert Breunig

    (Treasury, Government of Australia)

  • Anthony King

    (Treasury, Government of Australia)

This paper summarises new evidence from two Treasury working papers on the responsiveness of female labour supply to child care costs, availability, and quality. In one study, we drew on lessons from the literature and new detailed data to provide new estimates of the labour supply elasticity with respect to child care price for married women with young children. We found that, in contrast with previous Australian estimates, the cost of child care does have a statistically significant and negative effect on the labour supply of married mothers. This finding supports policy that reduces the costs of child care to encourage maternal labour supply. In a second study, we focused on the non-price factors and examined the impacts of subjective measures of the availability, quality, and affordability of child care on mothers’ labour supply. We found that, after controlling for other factors, in geographical areas with higher reports of difficulty with availability and quality (and affordability), women with young children work fewer hours and, in particular, are more likely to work part-time instead of full-time.

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File URL: http://archive.treasury.gov.au/documents/1783/PDF/04_New_Estimates_of_Child_Care.pdf
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Article provided by The Treasury, Australian Government in its journal Economic Roundup.

Volume (Year): (2010)
Issue (Month): 1 (April)
Pages: 51-62

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Handle: RePEc:tsy:journl:journl_tsy_er_2010_1_2
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  1. Stephen Whelan & Anu Rammohan, 2005. "Child Care and Female Decisions," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(2), pages 203-225, June.
  2. Rammohan, Anu, 2004. "Child care and female employment decisions: A theoretical note," Working Papers 3, University of Sydney, School of Economics.
  3. Denise Doiron & Guyonne Kalb, 2005. "Demands for Child Care and Household Labour Supply in Australia," The Economic Record, The Economic Society of Australia, vol. 81(254), pages 215-236, 09.
  4. Guyonne Kalb & Wang-Sheng Lee, 2008. "Childcare Use And Parents' Labour Supply In Australia ," Australian Economic Papers, Wiley Blackwell, vol. 47(3), pages 272-295, 09.
  5. 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.
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