A Single Parent’s Labor Supply: Evaluating Different Child Care Fees within an Intertemporal Framework

Minagawa Junichi () and Upmann Thorsten ()
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Minagawa Junichi: Faculty of Economics, Chuo University, Hachioji, Tokyo, Japan
Upmann Thorsten: Mercator School of Management, University Duisburg-Essen, Duisburg, Germany

The B.E. Journal of Theoretical Economics, 2014, vol. 14, issue 1, 177-215

Abstract: In this paper, we present a model of a one-parent, one-child household where parental decisions on labor supply, leisure, and the demand for parental and public child care are simultaneously endogenized and intertemporally determined. We characterize the path of the optimal decisions and investigate the effects of various public child care fees and of the quality of public child care services on the parent’s time allocation and the child’s performance level. Our results show that different public child care policies may induce substantially diverging effects and reveal that each policy frequently faces a trade off between an encouragement of labor supply and an enhancement of the child’s performance. In addition, we find that, from an efficiency perspective, an income-based fee levied on public child care services is dominated by both a flat fee and a use-based fee system.

Keywords: child care fees and services; demand for child care; intertemporal optimization; labor supply; leisure; parental time allocation; parental and public child care; public child care policy (search for similar items in EconPapers)
JEL-codes: D91 H24 H42 J13 J22 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1515/bejte-2012-0026

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