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Childcare Use and Parents’ Labour Supply in Australia

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  • Guyonne Kalb

    () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Wang-Sheng Lee

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

Based on data which are representative of the Australian population in 2002, this paper first analyses the demand for and cost of formal and informal childcare for couple and sole parent families, shedding light on factors which affect the demand for childcare. The predicted demand of formal childcare and the predicted costs of informal childcare arising from these models are then used to impute total childcare costs at different levels of labour supply. Finally, the predicted total costs are incorporated in the estimation procedure of structural labour supply models for couple and sole parent families. By making several extensions to the methodology adopted in Doiron and Kalb (2005a), who estimated similar models based on 1996 Australian data and which this paper largely replicates in terms of methodology, it is found that the average elasticities of labour supply with regard to the cost of childcare are quite similar to the earlier estimates. The elasticities remain at the lower end of the range found in the international literature with the exception of the elasticities for sole parents with preschool children and/or on relatively low wages

Suggested Citation

  • Guyonne Kalb & Wang-Sheng Lee, 2007. "Childcare Use and Parents’ Labour Supply in Australia," Melbourne Institute Working Paper Series wp2007n13, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2007n13
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2007n13.pdf
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    References listed on IDEAS

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    1. Anu Rammohan & Stephen Whelan, 2007. "The Impact Of Childcare Costs On The Full-Time/Part-Time Employment Decisions Of Australian Mothers," Australian Economic Papers, Wiley Blackwell, vol. 46(2), pages 152-169, June.
    2. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
    3. Keane, Michael & Moffitt, Robert, 1998. "A Structural Model of Multiple Welfare Program Participation and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 553-589, August.
    4. Callan, T. & van Soest, A.H.O., 1994. "Family labour supply and taxes in Ireland," Discussion Paper 1994-26, Tilburg University, Center for Economic Research.
    5. Guyonne Kalb & Rosanna Scutella, 2002. "Estimation of Wage Equations in Australia: Allowing for Censored Observations of Labour Supply," Melbourne Institute Working Paper Series wp2002n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    6. John Creedy & Guyonne Kalb, 2005. "Discrete Hours Labour Supply Modelling: Specification, Estimation and Simulation," Journal of Economic Surveys, Wiley Blackwell, vol. 19(5), pages 697-734, December.
    7. Denise Doiron & Guyonne Kalb, 2002. "Demand for Childcare Services and Labour Supply in Australian Families," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(2), pages 204-213.
    8. Denise Doiron & Guyonne Kalb, 2005. "Demands for Child Care and Household Labour Supply in Australia," The Economic Record, The Economic Society of Australia, vol. 81(254), pages 215-236, September.
    9. John Creedy & Alan S. Duncan & Mark Harris & Rosanna Scutella, 2002. "Microsimulation Modelling of Taxation and the Labour Market," Books, Edward Elgar Publishing, number 2796, April.
    10. Anu Rammohan & Stephen Whelan, 2006. "Child Care Costs and the Employment Status of Married Australian Mothers," CEPR Discussion Papers 517, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    11. Rammohan, Anu, 2004. "Child care and female employment decisions: A theoretical note," Working Papers 3, University of Sydney, School of Economics.
    12. Ross, Russell & Saunders, Peter, 1993. "The Labour Supply Behaviour of Sole Mothers and Married Mothers in Australia: Evidence from the 1986 Income Distribution Survey," Australian Economic Papers, Wiley Blackwell, vol. 32(60), pages 116-133, June.
    13. Ross, Russell T, 1986. "Analysis of the 1980 Sydney Survey of Work Patterns of Married Women:Further Results," The Economic Record, The Economic Society of Australia, vol. 62(178), pages 325-337, September.
    14. 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.
    15. Guyonne Kalb, 2002. "Estimation of Labour Supply Models for Four Separate Groups in the Australian Population," Melbourne Institute Working Paper Series wp2002n24, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
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    Cited by:

    1. Robert Breunig & Xiaodong Gong & Anthony King, 2012. "Partnered Women's Labour Supply and Child‐Care Costs in Australia: Measurement Error and the Child‐Care Price," The Economic Record, The Economic Society of Australia, vol. 88(s1), pages 51-69, June.
    2. Yin King Fok & Sung-Hee Jeon & Roger Wilkins, 2009. "Does Part-Time Employment Help or Hinder Lone Mothers Movements into Full-Time Employment?," Melbourne Institute Working Paper Series wp2009n25, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    3. Robert Breunig & Andrew Weiss & Chikako Yamauchi & Xiaodong Gong & Joseph Mercante, 2011. "Child Care Availability, Quality and Affordability: Are Local Problems Related to Labour Supply?," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 109-124, March.
    4. Edwin van Gameren, 2013. "The Role of Economic Incentives and Attitudes in Participation and Childcare Decisions," Journal of Family and Economic Issues, Springer, vol. 34(3), pages 296-313, September.
    5. Xiaodong Gong & Robert Breunig & Anthony King, 2010. "New estimates of the relationship between female labour supply and the cost, availability, and quality of child care," Economic Roundup, The Treasury, Australian Government, issue 1, pages 51-62, April.
    6. Robert Breunig & Joseph Mercante, 2010. "The Accuracy of Predicted Wages of the Non-Employed and Implications for Policy Simulations from Structural Labour Supply Models," The Economic Record, The Economic Society of Australia, vol. 86(272), pages 49-70, March.
    7. Chikako Yamauchi, 2010. "The availability of child care centers, perceived search costs and parental life satisfaction," Review of Economics of the Household, Springer, vol. 8(2), pages 231-253, June.
    8. Guyonne Kalb & Thor Thoresen, 2010. "A comparison of family policy designs of Australia and Norway using microsimulation models," Review of Economics of the Household, Springer, vol. 8(2), pages 255-287, June.
    9. Ross Guest & Nick Parr, 2013. "Family policy and couples’ labour supply: an empirical assessment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1631-1660, October.
    10. Guyonne Kalb, 2009. "Children, Labour Supply and Child Care: Challenges for Empirical Analysis," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 276-299.

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