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Child care, parental labor supply and tax revenue

Martin Eckhoff Andresen and Tarjei Havnes

Labour Economics, 2019, vol. 61, issue C

Abstract: We study the impact of child care for toddlers on the labor supply of mothers and fathers in Norway. For identification, we exploit the staggered expansion across municipalities following a large child care reform from 2002. Our IV-estimates indicate that child care causes an increase in the labor supply of cohabiting mothers who move towards full time employment. Despite this, average taxes paid on the extra income is low, lending little support to the argument that parts of the cost of child care is offset by increased taxes. Meanwhile, we find no impact for fathers.

Keywords: Child care; Female labor supply; Tax revenue; Instrumental variables (search for similar items in EconPapers)
JEL-codes: H24 H52 J13 J22 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Child Care, Parental Labor Supply and Tax Revenue (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:61:y:2019:i:c:s0927537119300880

DOI: 10.1016/j.labeco.2019.101762

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