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Wages for Women and Publicly Financed Day Care

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  • Lundholm, M.
  • Ohlsson, H.

Abstract

Public employment growth has been parallelled by increased female labour force participation, while real wages for typical female public sector occupations have not increased. In a theoretical model we, first, show that there is a tradeoff between day care provision and gross wages for occupations for which day care is a complement. It is possible to combine increased public labour demand with public day care provision leaving the wage unaffected. Second, non-parents will be in favour of increasing day care as long as day care productivity is higher than the inverse of the tax rate. This is because the effective labour supply and, therefore, the tax base increase. Third, parents want to push day care provision even further. They are prepared to accept a lower day care productivity than non-parents because day care provision relaxes the constraint on their desired labour supply. The Pareto efficient day care provision is between parents` and non-parents` preferred levels.
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Suggested Citation

  • Lundholm, M. & Ohlsson, H., 1995. "Wages for Women and Publicly Financed Day Care," Papers 1995-23, Uppsala - Working Paper Series.
  • Handle: RePEc:fth:uppaal:1995-23
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    References listed on IDEAS

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    7. Siv Gustafsson & Frank P. Stafford, 1994. "Three Regimes of Child Care: The United States, the Netherlands, and Sweden," NBER Chapters,in: Social Protection versus Economic Flexibility: Is There a Trade-Off?, pages 333-362 National Bureau of Economic Research, Inc.
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    10. Gahvari, Firouz, 1994. "In-kind transfers, cash grants and labor supply," Journal of Public Economics, Elsevier, vol. 55(3), pages 495-504, November.
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    13. Bergstrom, Ted & Blomquist, Soren, 1996. "The political economy of subsidized day care," European Journal of Political Economy, Elsevier, vol. 12(3), pages 443-457, November.
    14. Cremer, Helmuth & Gahvari, Firouz, 1997. "In-kind transfers, self-selection and optimal tax policy," European Economic Review, Elsevier, vol. 41(1), pages 97-114, January.
    15. Blomquist, Suren & Christiansen, Vidar, 1995. " Public Provision of Private Goods as a Redistributive Device in an Optimum Income Tax Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 547-567, December.
    16. 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.
    17. Munro, Alistair, 1991. "The optimal public provision of private goods," Journal of Public Economics, Elsevier, vol. 44(2), pages 239-261, March.
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    Citations

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    Cited by:

    1. Masaya Yasuoka, 2014. "Financing Elderly Care Service Subsidies horizontally differentiated duopoly," Discussion Paper Series 122, School of Economics, Kwansei Gakuin University, revised Oct 2014.
    2. Blomquist, Soren & Christiansen, Vidar, 1999. "The political economy of publicly provided private goods," Journal of Public Economics, Elsevier, vol. 73(1), pages 31-54, July.
    3. Blomquist, Soren & Christiansen, Vidar, 1998. "Topping Up or Opting Out? The Optimal Design of Public Provision Schemes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 399-411, May.
    4. David Domeij, 2013. "Should Day Care be Subsidized?," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 568-595.
    5. Zohal Hessami & Silke Uebelmesser, 2016. "A political-economy perspective on social expenditures: corruption and in-kind versus cash transfers," Economics of Governance, Springer, vol. 17(1), pages 71-100, February.
    6. Henry Ohlsson & Michael Lundholm, 2002. "Who takes care of the children? The quantity-quality model revisited," Journal of Population Economics, Springer;European Society for Population Economics, vol. 15(3), pages 455-461.
    7. Florence Jaumotte, 2003. "Female Labour Force Participation: Past Trends and Main Determinants in OECD Countries," OECD Economics Department Working Papers 376, OECD Publishing.
    8. Ghazala Naz, 2004. "The impact of cash-benefit reform on parents’ labour force participation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(2), pages 369-383, June.
    9. Bas van Groezen & L. Meijdam, 2009. "At whose service? Subsidizing services and the skill premium," Working Papers 09-30, Utrecht School of Economics.
    10. repec:use:tkiwps:3030 is not listed on IDEAS
    11. Florence Jaumotte, 2005. "Les femmes sur le marché du travail : Évidence empirique sur le rôle des politiques économiques et autres déterminants dans les pays de l'OCDE," Revue économique de l'OCDE, Éditions OCDE, vol. 2003(2), pages 57-123.
    12. Alessandra Casarico & Alessandro Sommacal, 2012. "Labor Income Taxation, Human Capital, and Growth: The Role of Childcare," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(4), pages 1182-1207, December.
    13. Masaya Yasuoka, 2017. "Elderly Care Service in an Aging Society," Discussion Paper Series 168, School of Economics, Kwansei Gakuin University, revised Oct 2017.
    14. Sören Blömquist & Vidar Christiansen, 1998. "Price Subsidies Versus Public Provision," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(3), pages 283-306, July.
    15. repec:spr:ecogov:v:17:y:2016:i:1:p:71-100 is not listed on IDEAS
    16. Gustafsson, Bjorn & Kjulin, Urban & Schwarz, Brita, 2002. "Central-Local Government Relations in Transition: The Case of Swedish Child Care," Public Choice, Springer, vol. 110(3-4), pages 305-325, March.
    17. Minagawa Junichi & Upmann Thorsten, 2014. "A Single Parent’s Labor Supply: Evaluating Different Child Care Fees within an Intertemporal Framework," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 14(1), pages 1-39, January.
    18. Alessandra Casarico & Alessandro Sommacal, 2018. "Taxation and parental time allocation under different assumptions on altruism," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(1), pages 140-165, February.
    19. Lundholm , Michael & Ohlsson , Henry, 2002. "Negative Externalities in Day Care: Optimal Tax Policy Response," Working Papers in Economics 68, University of Gothenburg, Department of Economics.
    20. Zohal Hessami & Claudio Thum & Silke Uebelmesser, 2012. "A Political Economy Explanation for In-kind Redistribution: The Interplay of Corruption and Democracy," Working Paper Series of the Department of Economics, University of Konstanz 2012-25, Department of Economics, University of Konstanz.
    21. Junichi Minagawa & Thorsten Upmann, 2006. "Labor Supply and the Demand for Child Care: An Intertemporal Approach," CESifo Working Paper Series 1819, CESifo Group Munich.
    22. Andersland, Leroy & Nilsen, Øivind A., 2016. "Households’ responses to price changes of formal childcare," Discussion Paper Series in Economics 20/2016, Norwegian School of Economics, Department of Economics.
    23. Atsushi Miyake & Masaya Yasuoka, 2016. "Which Should the Government Subsidize: Child Care or Elderly Care?," Discussion Paper Series 144, School of Economics, Kwansei Gakuin University, revised Jun 2016.
    24. Brink, Anna & Nordblom, Katarina, 2005. "Child-care quality and fee structure: Effects on labor supply and leisure composition," Working Papers in Economics 157, University of Gothenburg, Department of Economics.

    More about this item

    Keywords

    WAGES; WOMEN; HEALTH;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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