Estimating net chid care price elasticities of partnered women with pre-school children using a discrete structural labour supply-child care model
The purpose of this paper is to improve our understanding of the relationship between child care price and women's labour supply. We specify and estimate a discrete, structural model of the joint household decision over women’s labour supply and child care demand. Parents care about the well-being and development of their children and we capture this by including child care directly in household utility. Our model improves on previous papers in that we allow formal child care to be used for reasons other than freeing up time for mothers to work (such as child development) and we allow mothers’ work hours to exceed formal child care hours. As informal and paternal care are important features of the data, this second relaxation of previous hour constraints is particularly important. We estimate the model using data from 2005 to 2007 from the Household Income and Labour Dynamics in Australia (HILDA) Survey. We find that on average a one percent increase in the net price of child care leads to a decrease in hours of labour provided by partnered women of 0.10 per cent and a decrease in the employment rate of 0.06 per cent. These estimates are statistically significant. Furthermore, we find that labour supply responses are larger for women with lower wages, less education, and lower income.
|Date of creation:||Nov 2012|
|Date of revision:||Nov 2012|
|Contact details of provider:|| Postal: |
Phone: +61 2 6263 2111
Fax: +61 2 6273 2614
Web page: http://www.treasury.gov.au
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Charlene M. Kalenkoski & David C. Ribar & Leslie S. Stratton, 2005. "Parental Child Care in Single-Parent, Cohabiting, and Married-Couple Families: Time-Diary Evidence from the United Kingdom," American Economic Review, American Economic Association, vol. 95(2), pages 194-198, May.
- Rammohan, Anu, 2004. "Child care and female employment decisions: A theoretical note," Working Papers 3, University of Sydney, School of Economics.
- Connelly, Rachel, 1992. "The Effect of Child Care Costs on Married Women's Labor Force Participation," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 83-90, February.
- Tom Kornstad & Thor O. Thoresen, 2002.
"A Discrete Choice Model for Labor Supply and Child Care,"
315, Statistics Norway, Research Department.
- Tom Kornstad & Thor Thoresen, 2007. "A discrete choice model for labor supply and childcare," Journal of Population Economics, Springer, vol. 20(4), pages 781-803, October.
- Breunig, Robert & Cobb-Clark, Deborah A. & Gong, Xiaodong, 2005.
"Improving the Modeling of Couples' Labour Supply,"
IZA Discussion Papers
1773, Institute for the Study of Labor (IZA).
- James J. Heckman, 1974.
"Effects of Child-Care Programs on Women's Work Effort,"
in: Marriage, Family, Human Capital, and Fertility, pages 136-169
National Bureau of Economic Research, Inc.
- Heckman, James J, 1974. "Effects of Child-Care Programs on Women's Work Effort," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages S136-S163, Part II, .
- Jean Kimmel & Rachel Connelly, 2007. "Mothers’ Time Choices: Caregiving, Leisure, Home Production, and Paid Work," Journal of Human Resources, University of Wisconsin Press, vol. 42(3).
- Denise Doiron & Guyonne Kalb, 2005.
"Demands for Child Care and Household Labour Supply in Australia,"
The Economic Record,
The Economic Society of Australia, vol. 81(254), pages 215-236, 09.
- Denise Doiron & Guyonne Kalb, 2004. "Demands for Childcare and Household Labour Supply in Australia," Melbourne Institute Working Paper Series wp2004n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- Bhat, Chandra R., 2001. "Quasi-random maximum simulated likelihood estimation of the mixed multinomial logit model," Transportation Research Part B: Methodological, Elsevier, vol. 35(7), pages 677-693, August.
- Andrew Leigh, 2008.
"Returns To Education In Australia,"
The Economic Society of Australia, vol. 27(3), pages 233-249, 09.
- Gong, Xiaodong & van Soest, Arthur, 2000.
"Family Structure and Female Labour Supply in Mexico City,"
IZA Discussion Papers
214, Institute for the Study of Labor (IZA).
- Xiaodong Gong & Arthur van Soest, 2002. "Family Structure and Female Labor Supply in Mexico City," Journal of Human Resources, University of Wisconsin Press, vol. 37(1), pages 163-191.
- Gong, X. & van Soest, A.H.O., 1997. "Family Structure and Female Labour Supply in Mexico City," Discussion Paper 1997-114, Tilburg University, Center for Economic Research.
- repec:cup:cbooks:9780521747387 is not listed on IDEAS
- Stephen Whelan & Anu Rammohan, 2005. "Child Care and Female Decisions," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(2), pages 203-225, June.
- Ribar, D.C., 1993.
"A Structural Model of Child Care and the Labor Supply of Married Women,"
5-93-1, Pennsylvania State - Department of Economics.
- 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 558-97, July.
- Ribar, D.C., 1991. "A Structural Model of Child Care and the Labor Supply of Married Women," Papers 1-91-1, Pennsylvania State - Department of Economics.
- repec:cup:cbooks:9780521766555 is not listed on IDEAS
- 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.
- Alan Duncan & Gillian Paull & Jayne Taylor, 2001. "Mothers' employment and the use of childcare in the UK," IFS Working Papers W01/23, Institute for Fiscal Studies.
- Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
- Ribar, D.C., 1990.
"Child Care And The Labor Supply Of Married Women: Reducted Form Evidence,"
9-90-9, Pennsylvania State - Department of Economics.
- David C. Ribar, 1992. "Child Care and the Labor Supply of Married Women: Reduced Form Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 134-165.
- Kenneth Train, 2003.
"Discrete Choice Methods with Simulation,"
Online economics textbooks,
SUNY-Oswego, Department of Economics, number emetr2.
- Trevor Breusch & Edith Gray, 2004. "New Estimates of Mothers’ Forgone Earnings Using HILDA Data," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 7(2), pages 125-150, June.
When requesting a correction, please mention this item's handle: RePEc:tsy:wpaper:wpaper_tsy_wp_2012_1. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (The Treasury (Commonwealth of Australia))
If references are entirely missing, you can add them using this form.