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Taxing Childcare: Effects on Family Labor Supply and Children

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  • Gathmann, Christina

    (LISER)

  • Sass, Björn

    (University of Mannheim)

Abstract

Previous studies report a wide range of estimates for how female labor supply responds to childcare prices. We shed new light on this question using a reform that raised the prices of public daycare. Parents respond by reducing public daycare and increasing childcare at home. Parents also reduce informal childcare indicating that public daycare and informal childcare are complements. Female labor force participation declines and the response is strongest for single parents and low-income households. The short-run effects on cognitive and non-cognitive skills are mixed, but negative for girls. Spillover effects on older siblings suggest that the policy affects the whole household, not just targeted family members.

Suggested Citation

  • Gathmann, Christina & Sass, Björn, 2012. "Taxing Childcare: Effects on Family Labor Supply and Children," IZA Discussion Papers 6440, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6440
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    Cited by:

    1. Kai-Uwe Müller & Katharina Wrohlich, 2016. "Two Steps Forward—One Step Back? Evaluating Contradicting Child Care Policies in Germany," CESifo Economic Studies, CESifo Group, vol. 62(4), pages 672-698.
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    6. Jochen Kluve & Sebastian Schmitz, 2014. "Social Norms and Mothers’ Labor Market Attachment – The Medium-run Effects of Parental Benefits," Ruhr Economic Papers 0481, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
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    12. Bauernschuster, Stefan & Schlotter, Martin, 2015. "Public child care and mothers' labor supply—Evidence from two quasi-experiments," Journal of Public Economics, Elsevier, vol. 123(C), pages 1-16.
    13. Kugler Franziska & Schwerdt Guido & Wößmann Ludger, 2014. "Ökonometrische Methoden zur Evaluierung kausaler Effekte der Wirtschaftspolitik," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 15(2), pages 105-132, June.
    14. Christina Felfe & Natalia Nollenberger & Núria Rodríguez-Planas, 2015. "Can’t buy mommy’s love? Universal childcare and children’s long-term cognitive development," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(2), pages 393-422, April.
    15. Givord, Pauline & Marbot, Claire, 2015. "Does the cost of child care affect female labor market participation? An evaluation of a French reform of childcare subsidies," Labour Economics, Elsevier, vol. 36(C), pages 99-111.
    16. Volker Meier, 2017. "Zur optimalen Höhe von Subventionen für Kinderbetreuung: Ist das Betreuungsgeld überflüssig?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(04), pages 21-23, February.
    17. Katrin Huber, 2015. "Moving to an earnings-related parental leave system – do heterogeneous effects on parents make some children worse off?," Working Papers 160, Bavarian Graduate Program in Economics (BGPE).
    18. Sebastian Schmitz & Jochen Kluve, "undated". "Social Norms and Mothers' Labor Market Attachment: The Medium-run Effects of Parental Benefits," BDPEMS Working Papers 2014001, Berlin School of Economics.
    19. Andreas Kappeler & Andrés Fuentes Hutfilter, 2014. "Making Economic Growth more Socially Inclusive in Germany," OECD Economics Department Working Papers 1175, OECD Publishing.
    20. Muller,Miriam & Jaen,Martha, 2020. "Complex Decisions between Care and Paid Work : A Qualitative Study on the Demand for ChildcareServices in Mexico City," Policy Research Working Paper Series 9452, The World Bank.
    21. Kluve, Jochen & Schmitz, Sebastian, 2014. "Social Norms and Mothers' Labor Market Attachment – The Medium-run Effects of Parental Benefits," Ruhr Economic Papers 481, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
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    23. Fabian T. Dehos & Marie Paul, 2023. "The Effects of After-School Programs on Maternal Employment," Journal of Human Resources, University of Wisconsin Press, vol. 58(5), pages 1644-1678.
    24. 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.
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    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
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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