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Taxing Childcare: Effects on Family Labor Supply and Children

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  • Gathmann, Christina

    () (Heidelberg University)

  • 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 for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6440
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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. Schmitz, Sebastian & Kluve, Jochen, 2014. "Parental Benefits and Mothers Labor Market Outcomes in the Medium Run," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100567, Verein für Socialpolitik / German Economic Association.
    6. repec:zbw:rwirep:0481 is not listed on IDEAS
    7. 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.
    8. Johannes Geyer & Peter Haan & Katharina Wrohlich, 2014. "The Effects of Family Policy on Mothers' Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment," SOEPpapers on Multidisciplinary Panel Data Research 645, DIW Berlin, The German Socio-Economic Panel (SOEP).
    9. Kluve, Jochen & Schmitz, Sebastian, 2014. "Social Norms and Mothers' Labor Market Attachment: The Medium-Run Effects of Parental Benefits," IZA Discussion Papers 8115, Institute for the Study of Labor (IZA).
    10. Huber, Katrin, 2015. "Moving to an earnings-related parental leave system do heterogeneous effects on parents make some children worse off?," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113044, Verein für Socialpolitik / German Economic Association.
    11. Helmut Rainer & Stefan Bauernschuster & Natalia Danzer & Anita Fichtl & Timo Hener & Christian Holzner & Janina Reinkowski, 2013. "Kindergeld und Kinderfreibeträge in Deutschland: Evaluierung der Auswirkungen auf familienpolitische Ziele," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 66(09), pages 28-36, April.
    12. Sachverständigenrat zur Begutachtung der Gesamtwirtschaftlichen Entwicklung (ed.), 2013. "Gegen eine rückwärtsgewandte Wirtschaftspolitik. Jahresgutachten 2013/14," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201314.
    13. 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.
    14. Katrin Huber, 2015. "Moving to an Earnings-Related Parental Leave System: Do Heterogeneous Effects on Parents Make Some Children Worse Off?," SOEPpapers on Multidisciplinary Panel Data Research 791, DIW Berlin, The German Socio-Economic Panel (SOEP).
    15. Sebastian Schmitz & Jochen Kluve, 2014. "Social Norms and Mothers' Labor Market Attachment: The Medium-run Effects of Parental Benefits," Working Papers 2014001, Berlin Doctoral Program in Economics and Management Science (BDPEMS).
    16. Zimmermann, Klaus F., 2013. "Reflexionen zur Zukunft der Arbeit," IZA Standpunkte 56, Institute for the Study of Labor (IZA).
    17. Anita Fichtl & Timo Hener & Helmut Rainer, 2012. "Betreuungsgeld," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 65(21), pages 38-44, November.

    More about this item

    Keywords

    childcare; labor supply; cognitive skills; family policy; Germany;

    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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