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The Use and Cost of Child Care in Australia

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  • Francis Teal

Abstract

The use and cost of child care have become important policy issues with rising labour force participation for women responsible for young children. In this article it is shown that for children aged less than 2 informal care is much more important than formal care. For children aged 3 to 5 by far the most important, and cheapest, form of formal care is preschool. The category of formal care which has expanded most rapidly is child care centre places. However the recent expansion of female employment has been effected with no rise in the share of formal care in the total. Publicly supplied child care centre places are over 40 per cent more expensive to produce than private ones. It is argued that for those who do not receive a fee relief subsidy public care is more expensive than private care. The inference is drawn that people are willing to pay more for public than private care because public care is of higher quality. However those buying this higher quality care pay (at most) only 80 per cent of the cost of producing the care. The shortage of care in the public sector is not solved by private sector expansion because users of care are not willing to pay the price of producing high quality care.

Suggested Citation

  • Francis Teal, 1992. "The Use and Cost of Child Care in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 25(1), pages 3-14, January.
  • Handle: RePEc:bla:ausecr:v:25:y:1992:i:1:p:3-14
    DOI: 10.1111/j.1467-8462.1992.tb00571.x
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    1. Gustafsson, Siv & Stafford, Frank, 1988. "Daycare Subsidies and Labor Supply in Sweden," CEPR Discussion Papers 279, C.E.P.R. Discussion Papers.
    2. Gregory, R.G. & Daly, A.E., 1990. "Can Economic Theory Explain Why Australian Women Are So Well Paid Relative To Their U.S. Counterparts?," CEPR Discussion Papers 226, Centre for Economic Policy Research, Research School of Economics, Australian National University.
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    Cited by:

    1. Joyce P. Jacobsen, 2009. "Accommodating Families," Chapters, in: Kenneth G. Dau-Schmidt & Seth D. Harris & Orly Lobel (ed.), Labor and Employment Law and Economics, chapter 11, Edward Elgar Publishing.
    2. Daina McDonald, 2006. "150 Issues of The Australian Economic Review: The Changing Face of a Journal over Time," Melbourne Institute Working Paper Series wp2006n01, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    3. Denise Doiron & Guyonne Kalb, 2005. "Demands for Child Care and Household Labour Supply in Australia," The Economic Record, The Economic Society of Australia, vol. 81(254), pages 215-236, September.
    4. Chikako Yamauchi, 2010. "The availability of child care centers, perceived search costs and parental life satisfaction," Review of Economics of the Household, Springer, vol. 8(2), pages 231-253, June.
    5. Mahmud Rice, James & Goodin, Robert E. & Parpo, Antti, 2006. "The Temporal Welfare State: A Crossnational Comparison," Journal of Public Policy, Cambridge University Press, vol. 26(3), pages 195-228, December.

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