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Which is Better, Childcare Support or Public Capital Investment?

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  • Miyake, Yusuke

Abstract

In recent years, the birthrate in developed countries has been declining. The government has been providing financial support to households raising children by increasing childcare allowances and offering free childcare as part of its policy to reduce the birthrate. However, the total fertility rate in Japan continues to be at an all-time low, and the effects of these policies are unclear. This analysis will examine whether the direct allocation of funds to households as described above is beneficial to the declining birthrate and growth or whether the government's indirect increase in public capital can affect the birthrate by boosting labor productivity and expanding income. This analysis shows that an increased share of public capital investment brings higher economic growth. The growth rate will be maximized if all tax revenue is allocated to public capital investment.

Suggested Citation

  • Miyake, Yusuke, 2022. "Which is Better, Childcare Support or Public Capital Investment?," MPRA Paper 114528, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:114528
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    References listed on IDEAS

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    More about this item

    Keywords

    Public capital investment・Childcare support・Income tax・Economic growth;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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