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An Evaluation of A Pronatal Subsidy Program in Korea: A Quasi-Experimental Approach

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  • Cho, Yoonyoung

Abstract

This paper evaluates the overall effects of a pronatal subsidy program, the Basic Subsidy Program (BSP), in Korea. As the Total Fertility Rate(TFR) declines as low as 1.08 in 2005, several pronatal programs are urgently enlarged and newly introduced. One such program is the BSP for families with infants cared for in private day care centers. The subsidies mainly aim to improve the quality and the accessibility of child care, and encourage mothers' labor supply by providing lump-sum subsidy per child to the private day care centers. I show overall effects of this subsidy by taking advantage of a quasi-experimental environment where only the families with the infants(0-2 years) compared to the toddlers(3-5 years) that use private care centers rather than other types of facilities are subsidized. Findings show that the subsidies have some positive effects on quality characteristics at the subsidized facilities. However, the increase in per child input is far less than per child subsidy, which implies low effectiveness of the program. In addition, the subsidy is found to have little impact on households with young children.

Suggested Citation

  • Cho, Yoonyoung, 2008. "An Evaluation of A Pronatal Subsidy Program in Korea: A Quasi-Experimental Approach," MPRA Paper 25958, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:25958
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    File URL: https://mpra.ub.uni-muenchen.de/25958/1/MPRA_paper_25958.pdf
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    References listed on IDEAS

    as
    1. David M. Blau & H. Naci Mocan, 2002. "The Supply Of Quality In Child Care Centers," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 483-496, August.
    2. Eliana Garces & Duncan Thomas & Janet Currie, 2002. "Longer-Term Effects of Head Start," American Economic Review, American Economic Association, vol. 92(4), pages 999-1012, September.
    3. Ribar, David C, 1995. "A Structural Model of Child Care and the Labor Supply of Married Women," Journal of Labor Economics, University of Chicago Press, vol. 13(3), pages 558-597, July.
    4. James J. Heckman, 1974. "Effects of Child-Care Programs on Women's Work Effort," NBER Chapters,in: Marriage, Family, Human Capital, and Fertility, pages 136-169 National Bureau of Economic Research, Inc.
    5. Irene Powell & James Cosgrove, 1992. "Quality and Cost in Early Childhood Education," Journal of Human Resources, University of Wisconsin Press, vol. 27(3), pages 472-484.
    6. Cho, Yoonyoung, 2006. "An Analysis of Women's Fertility and Labor Supply: Implications for Family Policies," Discussion Paper 290, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    7. David M. Blau, 1999. "The Effect of Child Care Characteristics on Child Development," Journal of Human Resources, University of Wisconsin Press, vol. 34(4), pages 786-822.
    8. Charles Michalopoulos & Philip K. Robins & Irwin Garfinkel, 1992. "A Structural Model of Labor Supply and Child Care Demand," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 166-203.
    9. Jean Kimmel, 1998. "Child Care Costs As A Barrier To Employment For Single And Married Mothers," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 287-299, May.
    10. James J. Heckrnan, 1974. "Effects of Child-Care Programs on Women's Work Effort," NBER Chapters,in: Economics of the Family: Marriage, Children, and Human Capital, pages 491-524 National Bureau of Economic Research, Inc.
    11. David M. Blau, 1997. "The Production of Quality in Child Care Centers," Journal of Human Resources, University of Wisconsin Press, vol. 32(2), pages 354-387.
    12. David M. Blau & Alison P. Hagy, 1998. "The Demand for Quality in Child Care," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 104-146, February.
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    More about this item

    Keywords

    Child Care Subsidies; Quality of Care; Female Labor Supply;

    JEL classification:

    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • D10 - Microeconomics - - Household Behavior - - - General

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