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Child Care Costs and Mothers' Labor Supply: An Empirical Analysis for Germany

  • Katharina Wrohlich

This study analyzes the effect of child care costs on the labor supply of mothers with preschool children in Germany using data from the German Socio-Economic Panel (2002). Child care costs are estimated on the basis of a sample selection model. A structural household utility model, which is embedded in a detailed tax-benefit model, is used for labor supply estimation. In contrast to a previous German study, I find significant effects of child care costs on mother's labor supply. Compared to other countries such as the US, Canada or the UK, the effects are rather small, which can be explained by the fact that child care costs are already heavily subsidized in Germany.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.41290.de/dp412.pdf
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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 412.

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Length: 25 p.
Date of creation: 2004
Date of revision:
Handle: RePEc:diw:diwwpp:dp412
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  1. Ribar, D.C., 1991. "A Structural Model of Child Care and the Labor Supply of Married Women," Papers 1-91-1, Pennsylvania State - Department of Economics.
  2. Michaela Kreyenfeld & Karsten Hank, 1999. "The Availability of Child Care and Mothers' Employment in West Germany," Discussion Papers of DIW Berlin 191, DIW Berlin, German Institute for Economic Research.
  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.
  4. Lisa M. Powell, 1997. "The Impact of Child Care Cost on the Labour Supply of Married Mothers: Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 30(3), pages 577-94, August.
  5. Blau, David M & Robins, Philip K, 1988. "Child-Care Costs and Family Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 374-81, August.
  6. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
  7. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  8. Peter Haan, 2004. "Discrete Choice Labor Supply: Conditional Logit vs. Random Coefficient Models," Discussion Papers of DIW Berlin 394, DIW Berlin, German Institute for Economic Research.
  9. Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives – A Microsimulation Study for Germany," CESifo Economic Studies, CESifo, vol. 50(3), pages 541-568.
  10. Averett, S.L. & Peters, H.E. & Waldman, D.M., 1992. "Tax Credits, Labor Supply, and Child Care," University of Chicago - Economics Research Center 92-9, Chicago - Economics Research Center.
  11. Patricia M. Anderson & Phillip B. Levine, 1999. "Child Care and Mothers' Employment Decisions," JCPR Working Papers 64, Northwestern University/University of Chicago Joint Center for Poverty Research.
  12. Viktor Steiner & Katharina Wrohlich, 2004. "Work Incentives and Labor Supply Effects of the 'Mini-Jobs Reform' in Germany," Discussion Papers of DIW Berlin 438, DIW Berlin, German Institute for Economic Research.
  13. Gordon Cleveland & Morley Gunderson & Douglas Hyatt, 1996. "Child Care Costs and the Employment Decision of Women: Canadian Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 29(1), pages 132-51, February.
  14. David C. Ribar, 1992. "Child Care and the Labor Supply of Married Women: Reduced Form Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 134-165.
  15. Charles Michalopoulos & Philip K. Robins & Irwin Garfinkel, 1992. "A Structural Model of Labor Supply and Child Care Demand," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 166-203.
  16. Wenjui Han & Jane Waldfogel, 2001. "Child Care Costs and Women's Employment: A Comparison of Single and Married Mothers With Pre-School-Aged Children," Social Science Quarterly, Southwestern Social Science Association, vol. 82(3), pages 552-568.
  17. David M. Blau, 2003. "Child Care Subsidies as Social Policy," CESifo DICE Report, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(4), pages 03-07, October.
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