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Taxing Childcare: Effects on Childcare Choices, Family Labor Supply and Children

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  • Christina Gathmann
  • Björn Sass

Abstract

Previous studies report a range of estimates for the response of female labor supply and childcare attendance to childcare prices. We shed new light on these questions using a policy reform that raises the price of public daycare. After the reform, children are 8 percentage points less likely to attend public daycare which implies a compensated price elasticity of -0.6. There is little labor supply response in the full sample, though declines for vulnerable subgroups. Spillover effects on older siblings and fertility decisions show that the policy affects the whole household, not just targeted family members.

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  • Christina Gathmann & Björn Sass, 2017. "Taxing Childcare: Effects on Childcare Choices, Family Labor Supply and Children," SOEPpapers on Multidisciplinary Panel Data Research 923, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp923
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    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

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