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Arbeiten lohnt sich nicht - ein zweites Kind noch weniger

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  • Monika Bütler

Abstract

Child-care subsidies are meant to facilitate work for mothers with small children. The paper demonstrates that the predominant current subsidy scheme in Switzerland, which ties the subsidies to realized income (but not to potential income), creates strongly negative work incentives especially for well qualified women. With the example of the city of Zürich it is shown that it does not pay off for mothers to work more than one or two days per week, as any increase in the hours worked leads to a more than proportional rise in child-care costs. For more than one child, the effective total marginal tax rate, including child-care expenditures, can well exceed 100%. This effect is primarily due to the endogenous pricing of child-care facilities implied by the scheme, and much less to progressive taxation.

Suggested Citation

  • Monika Bütler, 2006. "Arbeiten lohnt sich nicht - ein zweites Kind noch weniger," University of St. Gallen Department of Economics working paper series 2006 2006-05, Department of Economics, University of St. Gallen.
    • Handle: RePEc:usg:dp2006:2006-05
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    More about this item

    Keywords

    Child Care Subsidies; Female Labour Supply; Fertility;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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