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The Effect of Child Care Subsidies: A Critique of the Rosen Model

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  • Iulie Aslaksen
  • Charlotte Koren
  • Marianne Stokstad

Abstract

In an influential article, Sherwin Rosen (1997) argues that Swedish subsidies of child care services lead to a substantial misallocation of resources that slows economic growth. We offer two major reasons why Rosen's approach is flawed. First and foremost, he ignores the positive externalities of increasing the quality of child care, despite their clear relevance to his general equilibrium model. Second, he overlooks distributional impacts, despite evidence that child care subsidies redistribute the costs of children between men and women, rich and poor, young and old. By exploring these and a number of smaller problems with Rosen's model we hope to encourage the development of more systematic efforts to explore the effects of state support for child rearing.

Suggested Citation

  • Iulie Aslaksen & Charlotte Koren & Marianne Stokstad, 2000. "The Effect of Child Care Subsidies: A Critique of the Rosen Model," Feminist Economics, Taylor & Francis Journals, vol. 6(1), pages 95-103.
    • Handle: RePEc:taf:femeco:v:6:y:2000:i:1:p:95-103
    DOI: 10.1080/135457000337705
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    References listed on IDEAS

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    1. Sherwin Rosen, 1997. "Public Employment, Taxes, and the Welfare State in Sweden," NBER Chapters, in: The Welfare State in Transition: Reforming the Swedish Model, pages 79-108, National Bureau of Economic Research, Inc.
    2. Bergstrom, Ted & Blomquist, Soren, 1996. "The political economy of subsidized day care," European Journal of Political Economy, Elsevier, vol. 12(3), pages 443-457, November.
    3. Sandmo, Agnar, 1990. "Tax Distortions and Household Production," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 78-90, January.
    4. Richard B. Freeman & Robert Topel & Birgitta Swedenborg, 1997. "The Welfare State in Transition: Reforming the Swedish Model," NBER Books, National Bureau of Economic Research, Inc, number free97-1, February.
    5. Ermisch, John F, 1988. "Purchased Child Care, Optimal Family Size and Mother's Employment," CEPR Discussion Papers 238, C.E.P.R. Discussion Papers.
    6. Freeman, Richard B. & Topel, Robert H. & Swedenborg, Birgitta (ed.), 1997. "The Welfare State in Transition," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226261782, April.
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    Cited by:

    1. David Domeij, 2013. "Should Day Care be Subsidized?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(2), pages 568-595.
    2. Mary Eschelbach Hansen & Paul Jacobs, 2007. "Valuing Substitute Families:Financial Support for Foster and Adoptive Families," Working Papers 2007-04, American University, Department of Economics.
    3. Nabanita Datta Gupta & Nina Smith & Mette Verner, 2008. "PERSPECTIVE ARTICLE: The impact of Nordic countries’ family friendly policies on employment, wages, and children," Review of Economics of the Household, Springer, vol. 6(1), pages 65-89, March.
    4. Datta Gupta, Nabanita & Smith, Nina & Verner, Mette, 2006. "Child Care and Parental Leave in the Nordic Countries: A Model to Aspire to?," IZA Discussion Papers 2014, Institute of Labor Economics (IZA).

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