The Effectiveness of Fiscal Stimuli for Working Parents

Henk-Wim de Boer (), Egbert L. W. Jongen () and Jan Kabátek
Additional contact information
Henk-Wim de Boer: Independent Researcher
Egbert L. W. Jongen: Leiden University

No 9298, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: To promote the labor participation of parents with young children, governments employ a number of fiscal instruments. Prominent examples are childcare subsidies and in-work benefits. However, which policy works best for employment is largely unknown. We study the effectiveness of different fiscal stimuli in an empirical model of household labor supply and childcare use. We use a large and rich administrative data set for the Netherlands. Large-scale reforms in childcare subsidies and in-work benefits in the data period facilitate the identification of the structural parameters. We find that an in-work benefit for secondary earners that increases with income is the most effective way to stimulate total hours worked. Childcare subsidies are less effective, as substitution of other types of care for formal care drives up public expenditures. In-work benefits that target both primary and secondary earners are much less effective, because primary earners are rather unresponsive to financial incentives.

Keywords: differences-in-differences; latent classes; household labor supply; discrete choice; work and care policies (search for similar items in EconPapers)
JEL-codes: C25 C52 H31 J22 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2015-08
New Economics Papers: this item is included in nep-dcm, nep-eur, nep-lma and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: Labour Economics, 2022, 76, 102152

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Related works:
Journal Article: The effectiveness of fiscal stimuli for working parents (2022)
Working Paper: The Effectiveness of Fiscal Stimuli for Working Parents (2015)
Working Paper: The effectiveness of fiscal stimuli for working parents (2014)
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