IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_3776.html
   My bibliography  Save this paper

Taxing Childcare: Effects on Family Labor Supply and Children

Author

Listed:
  • Christina Gathmann
  • Björn Sass

Abstract

Previous studies report a wide range of estimates for how female labor supply responds to childcare prices. We shed new light on this question using a reform that raised the prices of public daycare. Parents respond by reducing public daycare and increasing childcare at home. Parents also reduce informal childcare indicating that public daycare and informal childcare are complements. Female labor force participation declines and the response is strongest for single parents and low-income households. The short-run effects on cognitive and non-cognitive skills are mixed, but negative for girls. Spillover effects on older siblings suggest that the policy affects the whole household, not just targeted family members.

Suggested Citation

  • Christina Gathmann & Björn Sass, 2012. "Taxing Childcare: Effects on Family Labor Supply and Children," CESifo Working Paper Series 3776, CESifo.
    • Handle: RePEc:ces:ceswps:_3776
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp3776.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Currie, Janet & Thomas, Duncan, 1999. "Does Head Start help hispanic children?," Journal of Public Economics, Elsevier, vol. 74(2), pages 235-262, November.
    2. Patricia M. Anderson & Philip B. Levine, 1999. "Child Care and Mothers' Employment Decisions," NBER Working Papers 7058, National Bureau of Economic Research, Inc.
    3. Kimmel, Jean, 1995. "The Effectiveness of Child-Care Subsidies in Encouraging the Welfare-to-Work Transition of Low-Income Single Mothers," American Economic Review, American Economic Association, vol. 85(2), pages 271-275, May.
    4. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2008. "Bootstrap-Based Improvements for Inference with Clustered Errors," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 414-427, August.
    5. Hanel Barbara & Riphahn Regina T., 2012. "The Employment of Mothers – Recent Developments and their Determinants in East and West Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(2), pages 146-176, April.
    6. Michael Baker & Jonathan Gruber & Kevin Milligan, 2008. "Universal Child Care, Maternal Labor Supply, and Family Well-Being," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 709-745, August.
    7. Jonah B. Gelbach, 2002. "Public Schooling for Young Children and Maternal Labor Supply," American Economic Review, American Economic Association, vol. 92(1), pages 307-322, March.
    8. Florence Jaumotte, 2003. "Female Labour Force Participation: Past Trends and Main Determinants in OECD Countries," OECD Economics Department Working Papers 376, OECD Publishing.
    9. David Blau & Erdal Tekin, 2007. "The determinants and consequences of child care subsidies for single mothers in the USA," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(4), pages 719-741, October.
    10. Orazio Attanasio & Hamish Low & Virginia Sánchez-Marcos, 2008. "Explaining Changes in Female Labor Supply in a Life-Cycle Model," American Economic Review, American Economic Association, vol. 98(4), pages 1517-1552, September.
    11. Susan L. Averett & H. Elizabeth Peters & Donald M. Waldman, 1997. "Tax Credits, Labor Supply, And Child Care," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 125-135, February.
    12. Havnes, Tarjei & Mogstad, Magne, 2009. "No Child Left Behind: Universal Child Care and Children's Long-Run Outcomes," Memorandum 23/2009, Oslo University, Department of Economics.
    13. Tarjei Havnes & Magne Mogstad, 2011. "No Child Left Behind: Subsidized Child Care and Children's Long-Run Outcomes," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 97-129, May.
    14. Maria Chiuri, 2000. "Quality and Demand of Child Care and Female Labour Supply in Italy," LABOUR, CEIS, vol. 14(1), pages 97-118, March.
    15. Havnes, Tarjei & Mogstad, Magne, 2011. "Money for nothing? Universal child care and maternal employment," Journal of Public Economics, Elsevier, vol. 95(11), pages 1455-1465.
    16. Bester, C. Alan & Conley, Timothy G. & Hansen, Christian B., 2011. "Inference with dependent data using cluster covariance estimators," Journal of Econometrics, Elsevier, vol. 165(2), pages 137-151.
    17. Datta Gupta, Nabanita & Simonsen, Marianne, 2010. "Non-cognitive child outcomes and universal high quality child care," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 30-43, February.
    18. Brink, Anna & Nordblom, Katarina & Wahlberg, Roger, 2007. "Maximum fee vs child benefit: A welfare analysis of Swedish child-care fee reform," Working Papers in Economics 250, University of Gothenburg, Department of Economics.
    19. David C. Ribar, 1992. "Child Care and the Labor Supply of Married Women: Reduced Form Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 134-165.
    20. Tom Kornstad & Thor Thoresen, 2007. "A discrete choice model for labor supply and childcare," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(4), pages 781-803, October.
    21. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
    22. Lisa M. Powell, 1997. "The Impact of Child Care Cost on the Labour Supply of Married Mothers: Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 30(3), pages 577-594, August.
    23. Cecile Wetzels, 2005. "Supply and Price of Childcare and Female Labour Force Participation in the Netherlands," LABOUR, CEIS, vol. 19(s1), pages 171-209, December.
    24. Katharina Wrohlich, 2006. "Labor Supply and Child Care Choices in a Rationed Child Care Market," Discussion Papers of DIW Berlin 570, DIW Berlin, German Institute for Economic Research.
    25. Connelly, Rachel, 1992. "The Effect of Child Care Costs on Married Women's Labor Force Participation," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 83-90, February.
    26. Pierre Lefebvre & Philip Merrigan, 2008. "Child-Care Policy and the Labor Supply of Mothers with Young Children: A Natural Experiment from Canada," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 519-548, July.
    27. Siv Gustafsson & Frank Stafford, 1992. "Child Care Subsidies and Labor Supply in Sweden," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 204-230.
    28. Jean Kimmel, 1998. "Child Care Costs As A Barrier To Employment For Single And Married Mothers," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 287-299, May.
    29. Elizabeth U. Cascio, 2009. "Maternal Labor Supply and the Introduction of Kindergartens into American Public Schools," Journal of Human Resources, University of Wisconsin Press, vol. 44(1).
    30. Anna Brink & Katarina Nordblom & Roger Wahlberg, 2007. "Maximum fee versus child benefit: a welfare analysis of Swedish child-care fee reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(4), pages 457-480, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christina Gathmann & Björn Sass, 2018. "Taxing Childcare: Effects on Childcare Choices, Family Labor Supply, and Children," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 665-709.
    2. Yusuf Emre Akgunduz & Janneke Plantenga, 2018. "Child Care Prices And Maternal Employment: A Meta†Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 118-133, February.
    3. Y.E. Akgündüz & J. Plantenga, 2015. "Childcare Prices and Maternal Employment: a Meta-Analysis," Working Papers 15-14, Utrecht School of Economics.
    4. repec:diw:diwwpp:dp1747 is not listed on IDEAS
    5. Müller, Kai-Uwe & Wrohlich, Katharina, 2020. "Does subsidized care for toddlers increase maternal labor supply? Evidence from a large-scale expansion of early childcare," Labour Economics, Elsevier, vol. 62(C).
    6. Helmut Mahringer & Christine Zulehner, 2015. "Child-care costs and mothers’ employment rates: an empirical analysis for Austria," Review of Economics of the Household, Springer, vol. 13(4), pages 837-870, December.
    7. Busse, Anna & Gathmann, Christina, 2015. "The Effects of Free Childcare on Labor Supply and Children," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113078, Verein für Socialpolitik / German Economic Association.
    8. Guyonne Kalb, 2009. "Children, Labour Supply and Child Care: Challenges for Empirical Analysis," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 276-299, September.
    9. Anna Busse & Christina Gathmann, 2018. "Free Daycare and Its Effects on Children and Their Families," SOEPpapers on Multidisciplinary Panel Data Research 958, DIW Berlin, The German Socio-Economic Panel (SOEP).
    10. Jaume, David & Willén, Alexander, 2021. "The effect of teacher strikes on parents," Journal of Development Economics, Elsevier, vol. 152(C).
    11. David Blau, 2003. "Child Care Subsidy Programs," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 443-516, National Bureau of Economic Research, Inc.
    12. Havnes, Tarjei & Mogstad, Magne, 2011. "Money for nothing? Universal child care and maternal employment," Journal of Public Economics, Elsevier, vol. 95(11), pages 1455-1465.
    13. Herbst, Chris M., 2013. "Universal Child Care, Maternal Employment, and Children's Long-Run Outcomes: Evidence from the U.S. Lanham Act of 1940," IZA Discussion Papers 7846, Institute of Labor Economics (IZA).
    14. Elizabeth E. Davis & Caroline Carlin & Caroline Krafft & Nicole D. Forry, 2018. "Do Child Care Subsidies Increase Employment Among Low-Income Parents?," Journal of Family and Economic Issues, Springer, vol. 39(4), pages 662-682, December.
    15. Robert Breunig & Xiaodong Gong & Anthony King, 2012. "Partnered Women's Labour Supply and Child‐Care Costs in Australia: Measurement Error and the Child‐Care Price," The Economic Record, The Economic Society of Australia, vol. 88(s1), pages 51-69, June.
    16. Del Boca, Daniela & Vuri, Daniela, 2005. "Labor Supply and Child Care Costs: The Effect of Rationing," IZA Discussion Papers 1779, Institute of Labor Economics (IZA).
    17. Delia Furtado, 2015. "Can immigrants help women “have it all”? Immigrant labor and women’s joint fertility and labor supply decisions," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-19, December.
    18. Christoph Zangger & Janine Widmer & Sandra Gilgen, 2021. "Work, Childcare, or Both? Experimental Evidence on the Efficacy of Childcare Subsidies in Raising Parental Labor Supply," Journal of Family and Economic Issues, Springer, vol. 42(3), pages 449-472, September.
    19. Blau, David & Currie, Janet, 2006. "Pre-School, Day Care, and After-School Care: Who's Minding the Kids?," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 2, chapter 20, pages 1163-1278, Elsevier.
    20. Daniela Del Boca & Daniela Vuri, 2007. "The mismatch between employment and child care in Italy: the impact of rationing," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(4), pages 805-832, October.
    21. Sean P. Sall, 2014. "Maternal Labor Supply And The Availability Of Public Pre-K: Evidence From The Introduction Of Prekindergarten Into American Public Schools," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 17-34, January.

    More about this item

    Keywords

    childcare; labor supply; cognitive skills; family policy; Germany;
    All these keywords.

    JEL classification:

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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3776. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.