The Effectiveness of Fiscal Stimuli for Working Parents

Henk-Wim de Boer, Egbert L.W. Jongen and Jan Kabátek
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Henk-Wim de Boer: CPB Netherlands Bureau for Economic Policy Analysis; and Faculty of Economics and Business Administration, VU University Amsterdam
Egbert L.W. Jongen: CPB Netherlands Bureau for Economic Policy Analysis

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: To promote the labor participation of parents with young children, governments employ a number of fiscal instruments. Prominent examples are childcare subsidies and in-work benefits. However, which policy works best for employment is largely unknown. We study the effectiveness of different fiscal stimuli in an empirical model of household labor supply and childcare use. We use a large and rich administrative data set for the Netherlands. Largescale reforms in childcare subsidies and in-work benefits in the data period facilitate the identification of the structural parameters. We find that an in-work benefit for secondary earners that increases with income is the most effective way to stimulate total hours worked. Childcare subsidies are less effective, as substitution of other types of care for formal care drives up public expenditures. In-work benefits that target both primary and secondary earners are much less effective, because primary earners are rather unresponsive to financial incentives. Classification-C25, C52, H31, J22

Keywords: Discrete choice; household labor supply; latent classes; differences-indifferences; work and care policies (search for similar items in EconPapers)
Pages: 48pp
Date: 2015-09
New Economics Papers: this item is included in nep-dcm, nep-eur and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: The effectiveness of fiscal stimuli for working parents (2022)
Working Paper: The Effectiveness of Fiscal Stimuli for Working Parents (2015)
Working Paper: The effectiveness of fiscal stimuli for working parents (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2015n19

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