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Childcare Costs and the Demand for Children – Evidence from a Nationwide Reform

  • Mörk, Eva

    ()

    (IFAU)

  • Sjögren, Anna

    ()

    (IFAU)

  • Svaleryd, Helena

    ()

    (Research Institute of Industrial Economics (IFN))

We study the effect of child care costs on the fertility behavior of Swedish women and find that reductions in child care charges influence fertility decisions, even when costs are initially highly subsidized. Exploiting the exogenous variation in child care costs caused by a Swedish child care reform, we are able to identify the causal effect of child care costs on fertility in a context in which child care enrolment is almost universal and the labor force participation of mothers is very high. A typical household planning another child experienced a reduction in expected future child care costs of SEK 106,000 (USD 17,800). This reduction resulted in 3–5 more child births per 1,000 women during an 18 month period, which corresponds to a 4–6 per cent increase in the birth rate.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 782.

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Length: 40 pages
Date of creation: 02 Jan 2009
Date of revision: 20 Sep 2010
Handle: RePEc:hhs:iuiwop:0782
Contact details of provider: Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
Web page: http://www.ifn.se/
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