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A Regional Comparative Static CGE Analysis of Subsidized Child Care

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  • DAN S. RICKMAN
  • MARK C. SNEAD

Abstract

ABSTRACT Concerns with the equity of societal income distribution typically underpin the provision of government subsidies to low‐income households, in which such subsidies are commonly believed to reduce economic growth. Using a regional computable general equilibrium (CGE) model, this study examines the equity and growth aspects of subsidizing formal child care services for low‐income households at the state level. The results suggest that state government subsidization of formal child care services does not necessarily reduce the level of economic activity, even when accounting for negative growth effects of tax increases required to finance the subsidies. The CGE model also reveals economic impacts on households and industry sectors not directly affected by the subsidies, impacts that would be omitted from a partial equilibrium microeconometric appraisal.

Suggested Citation

  • Dan S. Rickman & Mark C. Snead, 2007. "A Regional Comparative Static CGE Analysis of Subsidized Child Care," Growth and Change, Wiley Blackwell, vol. 38(1), pages 111-139, March.
    • Handle: RePEc:bla:growch:v:38:y:2007:i:1:p:111-139
    DOI: 10.1111/j.1468-2257.2007.00355.x
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    1. Andrea Bassanini & Jørn Henrik Rasmussen & Stefano Scarpetta, 1999. "The Economic Effects of Employment-Conditional Income Support Schemes for the Low-Paid: An Illustration from a CGE Model Applied to Four OECD Countries," OECD Economics Department Working Papers 224, OECD Publishing.
    2. Edward J. Balistreri & Christine A. McDaniel & Eina Vivian Wong, 2003. "An Estimation of U.S. Industry-Level Capital-Labor Substitution," Computational Economics 0303001, University Library of Munich, Germany.
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    2. David Holland, 2010. "What happens when exports expand: some ideas for closure of regional computable general equilibrium models," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(2), pages 439-451, October.
    3. Vanesa Jorda & Jose M. Alonso, 2020. "What works to mitigate and reduce relative (and absolute) inequality?: A systematic review," WIDER Working Paper Series wp-2020-152, World Institute for Development Economic Research (UNU-WIDER).
    4. McCullough, Michael & Holland, David W. & Painter, Kathleen M. & Stodick, Leroy & Yoder, Jonathan K., 2011. "Economic and Environmental Impacts of Washington State Biofuel Policy Alternatives," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(3), pages 1-15.

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