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Who Benefits from Cash†for†Care? Effects of a Home Care Subsidy on Maternal Employment, Childcare Choices, and Children’s Development

Author

Listed:
  • Matthias Collischon
  • Daniel Kuehnle
  • Michael Oberfichtner

Abstract

We provide comprehensive evidence on Germany’s home care subsidy for one†and two†year†old children. In West Germany, take†up was 60 percent, and the subsidy reduced mothers’ probability to work within three years after childbirth by 1.4 percentage points and increased exclusive parental care by 6.5 percentage points. The subsidy improved children’s development at age six, with the exception of children who do not speak German at home. In East Germany, 30 percent of families used the subsidy, neither affecting maternal employment nor exclusive parental care. As an income transfer, the subsidy did not benefit families with the least economic resources most.

Suggested Citation

  • Matthias Collischon & Daniel Kuehnle & Michael Oberfichtner, 2024. "Who Benefits from Cash†for†Care? Effects of a Home Care Subsidy on Maternal Employment, Childcare Choices, and Children’s Development," Journal of Human Resources, University of Wisconsin Press, vol. 59(4), pages 1011-1051.
    • Handle: RePEc:uwp:jhriss:v:59:y:2024:i:4:p:1011-1051
    Note: DOI: https://doi.org/10.3368/jhr.0720-11051R1
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    References listed on IDEAS

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    1. Sandra E. Black & Paul J. Devereux & Katrine V. L�ken & Kjell G. Salvanes, 2014. "Care or Cash? The Effect of Child Care Subsidies on Student Performance," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 824-837, December.
    2. Thomas Cornelissen & Christian Dustmann & Anna Raute & Uta Schönberg, 2018. "Who Benefits from Universal Child Care? Estimating Marginal Returns to Early Child Care Attendance," Journal of Political Economy, University of Chicago Press, vol. 126(6), pages 2356-2409.
    3. Elizabeth Cascio, 2015. "The promises and pitfalls of universal early education," IZA World of Labor, Institute of Labor Economics (IZA), pages 116-116, January.
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    5. Kosonen Tuomas, 2014. "To Work or Not to Work? The Effect of Childcare Subsidies on the Labour Supply of Parents," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(3), pages 817-848, July.
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    More about this item

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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