Child-Related Transfers, Household Labour Supply, and Welfare

Nezih Guner, Remzi Kaygusuz () and Gustavo Ventura

The Review of Economic Studies, 2020, vol. 87, issue 5, 2290-2321

Abstract: What are the macroeconomic effects of transfers to households with children? How do alternative policies fare in welfare terms? We answer these questions in an equilibrium life-cycle model with household labour supply decisions, skill losses of females associated to non-participation, and heterogeneity in terms of fertility, childcare expenditures, and access to informal care. Calibrating our model to the U.S. economy, we first provide a roadmap for policy evaluation by contrasting transfers that are conditional on market work (childcare subsidies and childcare credits) with those that are not (child credits), when both types can be means tested or universal. We then evaluate expansions of current arrangements for the U.S. and find that expansions of conditional transfers have substantial positive effects on female labour supply, that are largest at the bottom of the skill distribution. Expanding childcare credits leads to long-run increases in the participation of married females of 10.6%, while an equivalent expansion of child credits leads to the opposite ($-$2.4%). Expanding existing programs generates substantial welfare gains for newborn households, which are largest for less-skilled households. Expanding childcare credits leads to the largest welfare gains for newborns and achieves majority support.

Keywords: Household labour supply; Child-related Transfers; Childcare; E62; H24; H31 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (36)

Downloads: (external link)
http://hdl.handle.net/10.1093/restud/rdaa011 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Child-Related Transfers, Household Labor Supply and Welfare (2017)
Working Paper: Child-Related Transfers, Household Labor Supply and Welfare (2017)
Working Paper: Child-Related Transfers, Household Labor Supply and Welfare (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:87:y:2020:i:5:p:2290-2321.

Access Statistics for this article

The Review of Economic Studies is currently edited by Thomas Chaney, Xavier d’Haultfoeuille, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Katrine Loken, Elias Papaioannou, Vincent Sterk and Noam Yuchtman

More articles in The Review of Economic Studies from Review of Economic Studies Ltd
Bibliographic data for series maintained by Oxford University Press ().