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A Structural Model of Childcare, Welfare, and the Labor Supply of Single Mothers

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  • Andrén, Thomas

    () (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

This paper considers the simultaneous relationship of the single mother’s decision to choose paid childcare, welfare participation and labor supply, and estimates a structural model that allows for a free error covariance. We use a discrete approach to the choice of labor supply together with the discrete choices of utilized paid childcare and welfare participation, which allow formulating the model as a multiple-choice problem. The results show that there is an association between social assistance, paid childcare and labor supply, but that the relationship is non-symmetric. An increase in the social assistance norms has a relatively small effect on paid childcare utilization, but a relatively larger effect on the mean labor supply. In contrast, a corresponding reduction in the childcare cost has a relatively large effect on the social assistance utilization but a relatively small effect on the mean labor supply. Our estimates suggest that a decrease in childcare cost increases the labor supply of those working rather than encourages non-workers to start work, which implies that childcare cost is foremost a barrier to fulltime work rather then a barrier to work at all.

Suggested Citation

  • Andrén, Thomas, 2002. "A Structural Model of Childcare, Welfare, and the Labor Supply of Single Mothers," Working Papers in Economics 82, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0082
    Note: Published as "The choice of paid childcare, welfare, and labor supply of single mothers" in Labour Economics
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    File URL: http://hdl.handle.net/2077/2848
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    References listed on IDEAS

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    More about this item

    Keywords

    labor supply; paid childcare; welfare participation; structural model; simulated maximum likelihood; Halton draws;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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