Assessing the Effects of the Child-Care Fee Reform on Public Expenditures and Taxation

Niklas Hanes (), Linda Holmlund () and Magnus Wikström
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Niklas Hanes: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Linda Holmlund: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

No 780, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: This paper studies the effects of the Swedish child-care fee reform on public expenditures and taxation in the municipalities. The reform implied a common system of child-care fees among all the municipalities and was introduced in 2002. In order to study its effects, we employ a difference-in-difference approach, where outcomes are compared with respect to differences in the municipalities’ pre-reform fee systems. It was found that pre-reform characteristics determine taxes and expenditures in the post-reform period. We then discuss the likely causes of these differences and find that the reform did change the child-care demand in municipalities that had applied time rates relative to those who applied income dependent fees prior to reform. Changes in child-care quality were not connected to the pre-reform fee systems characteristics.

Keywords: child-care subsidies; local public expenditures; income taxation (search for similar items in EconPapers)
JEL-codes: H71 H72 J13 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2009-10-02
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Citations: View citations in EconPapers (3)

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