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Reassessing the Role of Child Care Costs in the Work and Care Decisions of Australian Families

Listed author(s):
  • Deborah Cobb-Clark
  • Amy Liu
  • Deborah Mitchell

This paper reassesses how the costs associated with child care influence Australian families’ decisions about their work and child care arrangements. Using data from the Negotiating the Life Course Survey, we suggest that the cost of care may not be an important barrier to labour market participation. Non-employed mothers do not cite child care as the barrier preventing them from working and many two-earner families appear to be able to adjust their schedules so as to avoid paying child care costs at all. Instead, factors such as the cost structures associated with formal, informal and parental care; attitudes regarding work and child rearing; and the work arrangements of working couples to be more important in the labour-supply decision. In addition, the data suggests there are important differences in the cost structure of different types of care. While costs in formal care appear to be fixed, informal and parental care has a larger variable cost component. Results indicate that the relative importance of fixed costs influence the decision about which type of child care arrangement is utilised.

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Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 409.

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Length: 24 pages
Date of creation: Aug 1999
Handle: RePEc:auu:dpaper:409
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  1. Ribar, David C, 1995. "A Structural Model of Child Care and the Labor Supply of Married Women," Journal of Labor Economics, University of Chicago Press, vol. 13(3), pages 558-597, July.
  2. Deborah Schofield & Josh Polette, 1998. "Measuring the Impact of Child Care Subsidies on the Incomes of Mothers Returning to Work," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 31(1), pages 47-62.
  3. 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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