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Can Child Care Policy Encourage Employment and Fertility?: Evidence from a Structural Model

  • Peter Haan
  • Katharina Wrohlich

In this paper we develop a structural model of female employment and fertility which accounts for intertemporal feedback effects between the two outcomes. We identify the effect of financial incentives on the employment and fertility decision by exploiting variation in the tax and transfer system which differs by employment state and number of children. To this end we simulate in detail the effects of the tax and transfer system including child care costs. The model provides estimates of structural preferences of women which can be used to study the effect of various policy reforms. In particular, we show that increasing child care subsidies conditional on employment increases labor supply of all women as well as fertility of the childless and highly educated women.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.342348.de/dp935.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 935.

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Length: 30 p.
Date of creation: 2009
Date of revision:
Handle: RePEc:diw:diwwpp:dp935
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  27. Ghazala Azmat & Libertad González Luna, 2008. "Targeting fertility and female participation through the income tax," Economics Working Papers 1113, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2009.
  28. Viktor Steiner & Katharina Wrohlich & Peter Haan & Johannes Geyer, 2008. "Documentation of the Tax-Benefit Microsimulation Model STSM: Version 2008," Data Documentation 31, DIW Berlin, German Institute for Economic Research.
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  30. Viktor Steiner & Peter Haan & Katharina Wrohlich, 2005. "Dokumentation des Steuer-Transfer-Mikrosimulationsmodells STSM 1999 - 2002," Data Documentation 9, DIW Berlin, German Institute for Economic Research.
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