Labor supply heterogeneity and demand for child care of mothers with young children

Patricia Apps (), Jan Kabátek, Ray Rees and Arthur Soest
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Arthur Soest: IZA

Empirical Economics, 2016, vol. 51, issue 4, No 17, 1677 pages

Abstract: Abstract This paper presents a structural model of the labor supply and child care choices of partnered mothers with pre-school aged children. The father’s time-use decisions are taken as given. The main goal is to analyze the sensitivity of maternal time use to the price of child care, taxes, benefits and child care subsidies. To account for non-convexities in the budget sets, we specify a discrete choice model. We estimate the model on data on couples with young children from the HILDA survey representative of the Australian population, which contains detailed information on time use and bought-in child care. Simulations based on the estimated parameters show that the time decisions of mothers with pre-school children are highly sensitive to changes in wages and the cost of child care. Our results also suggest that lowering effective tax rates faced by partnered mothers as second earners, by switching from family payments that are targeted on joint incomes to payments that are universal and funded by a more progressive individual-based income tax, would lead to a substantial increase in their labor force participation and hours of work.

Keywords: Time use; Income tax; Child care subsidies (search for similar items in EconPapers)
JEL-codes: H24 J13 J22 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Labor supply heterogeneity and demand for child care of mothers with young children (2016)
Working Paper: Labor Supply Heterogeneity and Demand for Child Care of Mothers with Young Children (2012)
Working Paper: Labor Supply Heterogeneity and Demand for Child Care of Mothers with Young Children (2012)
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DOI: 10.1007/s00181-015-1046-4

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