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Childcare Costs and the Demand for Children – Evidence from a Nationwide Reform

Author

Listed:
  • Mörk, Eva

    (Department of Economics)

  • Sjögren, Anna

    (IFAU)

  • Svaleryd, Helena

    (Research Institute of Industrial Economics (IFN))

Abstract

We study the effect of child care costs on the fertility behavior of Swedish women and find that reductions in child care charges influence fertility decisions, even when costs are initially highly subsidized. Exploiting the exogenous variation in child care costs caused by a Swedish child care reform, we are able to identify the causal effect of child care costs on fertility in a context in which child care enrolment is almost universal and the labor force participation of mothers is very high. A typical household planning another child experienced a reduction in expected future child care costs of SEK 106,000 (USD 17,800). This reduction resulted in 3–5 more child births per 1,000 women during an 18 month period, which corresponds to a 4–6 per cent increase in the birth rate.

Suggested Citation

  • Mörk, Eva & Sjögren, Anna & Svaleryd, Helena, 2009. "Childcare Costs and the Demand for Children – Evidence from a Nationwide Reform," Working Paper Series 782, Research Institute of Industrial Economics, revised 20 Sep 2010.
    • Handle: RePEc:hhs:iuiwop:0782
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    More about this item

    Keywords

    Child Care; Cost of children; Fertility; Quasi-experiment; Difference-indifferences;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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