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Child Care, Parental Labor Supply and Tax Revenue

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  • Andresen, Martin Eckhoff

    (University of Oslo)

  • Havnes, Tarjei

    (Norwegian Ministry of Finance)

Abstract

We study the impact of child care for toddlers on the labor supply of mothers and fathers in Norway. For identification, we exploit the staggered expansion across municipalities following a large reform from 2002. Our IV-estimates indicate that child care use causes an increase in the labor supply of mothers. Results suggest that cohabiting mothers move towards full time employment, while single mothers move to part time. Meanwhile, we find no impact for fathers or grandparents. We also find an increase in the taxes paid from cohabiting mothers, lending some support to the argument that parts of the cost of child care is offset by increased taxes.

Suggested Citation

  • Andresen, Martin Eckhoff & Havnes, Tarjei, 2018. "Child Care, Parental Labor Supply and Tax Revenue," IZA Discussion Papers 11576, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11576
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    Cited by:

    1. Franziska Zimmert, 2023. "Early child care and the employment potential of mothers: evidence from semi-parametric difference-in-differences estimation," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-22, December.
    2. Alexandre Laurin & Jacob Kim, 2019. "Mothers at Work: The Fiscal Implications of the Proposed Ontario Childcare Rebate," e-briefs 287, C.D. Howe Institute.
    3. Brewer, Mike & Cattan, Sarah & Crawford, Claire & Rabe, Birgitta, 2022. "Does more free childcare help parents work more?," Labour Economics, Elsevier, vol. 74(C).
    4. Henning Hermes & Marina Krauß & Philipp Lergetporer & Frauke Peter & Simon Wiederhold, 2022. "Early Child Care, Maternal Labor Supply, and Gender Equality: A Randomized Controlled Trial," CESifo Working Paper Series 10178, CESifo.
    5. Henrik Kleven & Camille Landais & Johanna Posch & Andreas Steinhauer & Josef Zweimüller, 2020. "Do Family Policies Reduce Gender Inequality? Evidence from 60 Years of Policy Experimentation," NBER Working Papers 28082, National Bureau of Economic Research, Inc.
    6. Alena Bicakova & Klara Kaliskova, 2022. "Is Longer Maternal Care Always Beneficial? The Impact of a Four-year Paid Parental Leave," CERGE-EI Working Papers wp732, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    7. Gozde Corekcioglu & Marco Francesconi & Astrid Kunze, 2022. "Expansions in Paid Parental Leave and Mothers' Economic Progress," CESifo Working Paper Series 10028, CESifo.
    8. Markussen, Simen & Røed, Knut, 2023. "The rising influence of family background on early school performance," Economics of Education Review, Elsevier, vol. 97(C).
    9. Willage, Barton & Willén, Alexander, 2022. "Postpartum Job Loss: Transitory Effect on Mothers, Long-run Damage to Children," European Economic Review, Elsevier, vol. 150(C).
    10. Selina Gangl & Martin Huber, 2021. "From homemakers to breadwinners? How mandatory kindergarten affects maternal labour market outcomes," Papers 2111.14524, arXiv.org, revised Mar 2022.
    11. Huebener, Mathias & Pape, Astrid & Spiess, C. Katharina, 2020. "Parental labour supply responses to the abolition of day care fees," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 510-543.
    12. Emily Nix & Martin Eckhoff Andresen, 2019. "What Causes the Child Penalty? Evidence from Same Sex Couples and Policy Reforms," Discussion Papers 902, Statistics Norway, Research Department.
    13. Gangl, Selina & Huber, Martin, 2021. "From homemakers to breadwinners? How mandatory kindergarten affects maternal labour market attachment," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203636, Verein für Socialpolitik / German Economic Association, revised 2021.
    14. Hermes, Henning & Krauß, Marina & Lergetporer, Philipp & Peter, Frauke & Wiederhold, Simon, 2022. "Early Child Care and Labor Supply of Lower-SES Mothers: A Randomized Controlled Trial," IZA Discussion Papers 15814, Institute of Labor Economics (IZA).
    15. Peter Huber & Thomas Horvath & Klaus Nowotny & Margit Schratzenstaller & Silvia Rocha-Akis & Hedwig Lutz & Christine Mayrhuber, 2021. "Analysen zur rezenten Entwicklungen der Familie in Österreich. Beiträge des WIFO zum 6. Österreichischen Familienbericht 2009-2019," WIFO Studies, WIFO, number 67115, February.
    16. Pierre Pora, 2020. "Keep Working and Spend Less? Collective Childcare and Parental Earnings in France," Working Papers hal-04159681, HAL.
    17. BOUSSELIN Audrey, 2019. "Expanding access to universal childcare: Effects on childcare arrangements and maternal employment," LISER Working Paper Series 2019-11, Luxembourg Institute of Socio-Economic Research (LISER).
    18. Simon Bensnes & Ingrid Huitfeldt & Edwin Leuven, 2023. "Reconciling estimates of the long-term earnings effect of fertility," Discussion Papers 1004, Statistics Norway, Research Department.
    19. Padilla-Romo, María & Peluffo, Cecilia & Viollaz, Mariana, 2022. "Parents' Effective Time Endowment and Divorce: Evidence from Extended School Days," IZA Discussion Papers 15304, Institute of Labor Economics (IZA).
    20. Köppl-Turyna, Monika & Graf, Nikolaus, 2023. "Kinderbetreuung und Vereinbarkeit im internationalen Vergleich: Update des EcoAustria Scoreboard-Indikators," Policy Notes 54, EcoAustria – Institute for Economic Research.
    21. Thomas Benison & Isabelle Sin, 2023. "The wage cost of a lack of access to affordable childcare in Aotearoa New Zealand," Working Papers 23_02, Motu Economic and Public Policy Research.
    22. Bastian, Jacob E. & Jones, Maggie R., 2021. "Do EITC expansions pay for themselves? Effects on tax revenue and government transfers," Journal of Public Economics, Elsevier, vol. 196(C).
    23. Jon H. Fiva & Max-Emil M. King, 2022. "Child Penalties in Politics," CESifo Working Paper Series 9611, CESifo.

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    More about this item

    Keywords

    child care; female labor supply; tax revenue; instrumental variables;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • 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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