The Effect of Long-Term-Care Subsidies on Female Labor Supply and Fertility

Evelyn Korn and Matthias Wrede

No 3931, CESifo Working Paper Series from CESifo

Abstract: Fertility and the provision of long-term care are connected by an aspect that has not received attention so far: both are time consuming activities that can be produced within the household or bought at the market and are, thus, connected through the intertemporal budget constraint of the household that accounts for time and money. This paper models that link and analyzes the effect of intervention in the long-term-care market on female labor-market related decisions. It shows that women’s fertility as well as their labor supply when young are affected by such policies. The overall effect can be decomposed into an opportunity-cost effect and a consumption-smoothing effect that each impact fertility as well as labor supply in opposite directions. Using European survey data, the paper shows that the consumption-smoothing effect is dominant.

Keywords: long-term care; child care; female labor supply; fertility (search for similar items in EconPapers)
JEL-codes: D91 I13 J13 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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