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Can Parents Afford to Work?: Childcare Costs, Tax-Benefit Policies and Work Incentives

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  • Herwig Immervoll
  • David Barber

Abstract

Finding a suitable balance of work and family life is not an easy task for parents who face multiple, and potentially conflicting, demands. Childcare policies play a crucial role in helping parents reconcile care and employment-related tasks. But inconsistent or poorly implemented policies can also introduce additional barriers that make it harder for families to arrange and share their responsibilities according to their needs and preferences. This paper quantifies the net cost of purchasing centre-based childcare in OECD countries taking into account a wide range of influences on household budgets, including fees charged by childcare providers as well as childcare-related tax concessions and cash benefits available to parents. Building on these calculations, family resources are evaluated for different employment situations in order to assess the financial trade-offs between work and staying at home. Results are disaggregated to identify the policy features that present barriers to work for parents whose employment decisions are known to be particularly responsive to financial work incentives: lone parents and second earners with young children requiring care. Trouver un juste équilibre entre le travail et la vie de famille n’est pas toujours facile pour des parents confrontés à des contraintes multiples, potentiellement contradictoires. Les mesures en faveur de la garde des enfants jouent un rôle essentiel pour ce qui est d’aider les parents à concilier ces responsabilités et les contraintes liées à un emploi. Mais des politiques incohérentes ou mal mises en œuvre peuvent aussi créer des obstacles supplémentaires qui feront qu’il sera plus difficile encore pour les familles de s’organiser et de partager les tâches en fonction de leurs besoins et de leurs préférences. Il s’agit ici de mesurer le coût net de l’achat de services de garde d’enfants dans des structures spécifiques, dans les pays de l’OCDE, en faisant intervenir tout un éventail d’éléments qui influent sur le budget des ménages, à savoir notamment les tarifs pratiqués par les prestataires de services de garde ainsi que les avantages fiscaux et prestations en espèces dont les parents peuvent bénéficier au titre de la garde des enfants. En s’appuyant sur ces calculs, on évalue les ressources des familles dans différentes situations d’emploi afin de mettre en évidence les termes du choix financier entre travailler et rester à la maison. Les résultats sont affinés pour faire apparaître les éléments, dans les dispositifs publics, qui créent des obstacles à l’emploi des parents dont on sait que la décision d’emploi est particulièrement sensible aux incitations financières en faveur de l’activité : en l’occurrence, parents isolés et seconds apporteurs de revenu ayant de jeunes enfants qui doivent être gardés.

Suggested Citation

  • Herwig Immervoll & David Barber, 2005. "Can Parents Afford to Work?: Childcare Costs, Tax-Benefit Policies and Work Incentives," OECD Social, Employment and Migration Working Papers 31, OECD Publishing.
  • Handle: RePEc:oec:elsaab:31-en
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    File URL: http://dx.doi.org/10.1787/312744260654
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    References listed on IDEAS

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    Cited by:

    1. Bick, Alexander & Fuchs-Schündeln, Nicola, 2012. "Taxation and Labor Supply of Married Women across Countries: A Macroeconomic Analysis," CEPR Discussion Papers 9115, C.E.P.R. Discussion Papers.
    2. Pia S. Schober & Christian Schmitt, 2013. "Day-Care Expansion and Parental Subjective Well-Being: Evidence from Germany," SOEPpapers on Multidisciplinary Panel Data Research 602, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Pia S. Schober & C. Katharina Spieß, 2014. "Local Day-Care Quality and Maternal Employment: Evidence from East and West Germany," SOEPpapers on Multidisciplinary Panel Data Research 649, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. repec:esr:chaptr:jacb201240 is not listed on IDEAS
    5. repec:esr:chaptr:jacb201239 is not listed on IDEAS
    6. Johannes Geyer & Viktor Steiner, 2007. "Short-Run and Long-Term Effects of Childbirth on Mothers' Employment and Working Hours across Institutional Regimes: An Empirical Analysis Based on the European Community Household Panel," Discussion Papers of DIW Berlin 682, DIW Berlin, German Institute for Economic Research.
    7. Jonathan Bradshaw & Petra Hoelscher & Dominic Richardson, 2007. "An Index of Child Well-being in the European Union," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 80(1), pages 133-177, January.
    8. Wrohlich, Katharina, 2006. "Labor Supply and Child Care Choices in a Rationed Child Care Market," IZA Discussion Papers 2053, Institute for the Study of Labor (IZA).
    9. Matthias Wrede, 2011. "Hyperbolic discounting and fertility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(3), pages 1053-1070, July.
    10. Evridiki Tsounta, 2006. "Why Are Women Working So Much More in Canada? An International Perspective," IMF Working Papers 06/92, International Monetary Fund.
    11. Wim Van Lancker & Joris Ghysels, 2013. "Great expectations, but how to achieve them? Explaining patterns of inequality in childcare use across 31 developed countries," Working Papers 1305, Herman Deleeck Centre for Social Policy, University of Antwerp.
    12. Peter Haan & Katharina Wrohlich, 2010. "Optimal Taxation: The Design of Child-Related Cash and In-Kind Benefits," German Economic Review, Verein für Socialpolitik, vol. 11, pages 278-301, August.
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    16. Filgueira, Fernando & Rossel, Cecilia, 2017. "Confronting inequality: Social protection for families and early childhood through monetary transfers and care worldwide," Políticas Sociales 226, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    17. Callan, Tim & Keane, Claire & Savage, Michael & Walsh, John R. & Timoney, Kevin, 2012. "Work Incentives: New Evidence for Ireland," Papers BP2013/3, Economic and Social Research Institute (ESRI).
    18. Olivier Thevenon, 2009. "Does fertility respond to work and family reconciliation policies in France?," Working Papers hal-00424832, HAL.
    19. Pia S. Schober & Gundula Zoch, 2015. "Change in the Gender Division of Domestic Work after Mummy or Daddy Took Leave: An Examination of Alternative Explanations," SOEPpapers on Multidisciplinary Panel Data Research 803, DIW Berlin, The German Socio-Economic Panel (SOEP).

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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