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Fertility, Female Labor Supply, and Family Policy

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Listed:
  • Hans Fehr
  • Daniela Ujhelyiova

Abstract

The present paper develops a general equilibrium model with overlapping generations and endogenous fertility in order to analyze the interaction between public policy and household labor supply and fertility decisions. The model's benchmark equilibrium reflects the current family policy consisting of joint taxation of married couples, monetary transfers and in-kind benefits which reduce the time cost of children. Then we simulate alternative reforms of the tax and the child benefit system and analyze the long-run impact on fertility and female labor supply. Our simulations indicate three central results: First, policies which simply increase the family budget either via higher transfers (direct or in-kind) or via family splitting increase fertility but reduce female employment. Second, increasing tax revenues due to the introduction of individual taxation would increase female employment but reduce fertility. Third, revenue neutral policies such as a reform of the benefit structure or a move towards individual taxation combined with an increase in in-kind benefits may achieve both goals and therefore yield significant welfare gains.

Suggested Citation

  • Hans Fehr & Daniela Ujhelyiova, 2011. "Fertility, Female Labor Supply, and Family Policy," CESifo Working Paper Series 3455, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3455
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    References listed on IDEAS

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    Cited by:

    1. Robert Fenge & Lisa Stadler, 2014. "Three Family Policies to Reconcile Fertility and Labor Supply," CESifo Working Paper Series 4922, CESifo Group Munich.
    2. repec:mnb:finrev:v:16:y:2017:i:4:p:5-35 is not listed on IDEAS
    3. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2013. "Reforming Family Taxation in Germany - Labor Supply vs. Insurance Effects," CESifo Working Paper Series 4386, CESifo Group Munich.
    4. Bick, Alexander, 2011. "The quantitative role of child care for female labor force participation and fertility," MPRA Paper 31713, University Library of Munich, Germany.

    More about this item

    Keywords

    stochastic fertility; general equilibrium life cycle model;

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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