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The effect of long term subsidies on female labor supply and fertility

Evelyn Korn and Matthias Wrede ()

No 201243, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

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: J13 D91 I13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dem and nep-lma
Date: 2012
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http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/43-2012_korn.pdf First version, 2011 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201243

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