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Modes of Child Care

Author

Listed:
  • Gerhard Glomm
  • Volker Meier

Abstract

We model choices between caring for an infant at home or through some market provision of child care. Maternal labor supply necessitates child care purchased in the market. Households are distinguished along three dimensions: (i) Exogenous income, (ii) the wage rate of the primary care giver and (iii) the quality which the primary caregiver provides for child care. The market can supply child care at varying qualities and in continuous amounts. All households value consumption and child care quality. Sources of market failure comprise taxation of labor and productivity impacts on child care not fully taken account of by parents. Optimal corrective subsidies are highly correlated with taxed paid by secondary earners. In a second-best environment, typical policies of subsidizing child care will also distort quality choices. Employing “no-use subsidies” mitigates such distortions and can also counter excessive levels of subsidies for external child care.

Suggested Citation

  • Gerhard Glomm & Volker Meier, 2016. "Modes of Child Care," CESifo Working Paper Series 6287, CESifo.
    • Handle: RePEc:ces:ceswps:_6287
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    References listed on IDEAS

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    Cited by:

    1. Volker Meier, 2017. "The Optimal Level of Childcare Subsidies: Is the Childcare Allowance Superfluous?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(04), pages 21-23, February.
    2. Volker Meier & Matthew D. Rablen, 2019. "Political economy of redistribution between traditional and modern families," CESifo Working Paper Series 7658, CESifo.
    3. Bar-El, Ronen & Hatsor, Limor & Tobol, Yossef, 2020. "Home production, market substitutes, and the labor supply of mothers," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 378-390.

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    More about this item

    Keywords

    child care; labor supply; subsidies; family policy;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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