Labor supply heterogeneity and demand for child care of mothers with young children
Apps,Patricia Kabatek,Jan Rees,Ray van Soest,Arthur
Apps,Patricia
Kabatek,Jan
Rees,Ray
van Soest,Arthur
Abstract
This paper presents a structural model of the labor supply and child care choices of partnered mothers with pre-school aged children. The father's time-use decisions are taken as given. The main goal is to analyze the sensitivity of maternal time use to the price of child care, taxes, benefits and child care subsidies. To account for non-convexities in the budget sets, we specify a discrete choice model. We estimate the model on data on couples with young children from the HILDA survey representative of the Australian population, which contains detailed information on time use and bought-in child care. Simulations based on the estimated parameters show that the time decisions of mothers with pre-school children are highly sensitive to changes in wages and the cost of child care. Our results also suggest that lowering effective tax rates faced by partnered mothers as second earners, by switching from family payments that are targeted on joint incomes to payments that are universal and funded by a more progressive individual-based income tax, would lead to a substantial increase in their labor force participation and hours of work.
Description
Date
2016-12
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
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Journal Issue
Keywords
Time use, Income tax, Child care subsidies, J22 - Time Allocation and Labor Supply, J13 - Fertility ; Family Planning ; Child Care ; Children ; Youth, H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
Citation
Apps, P, Kabatek, J, Rees, R & van Soest, A 2016, 'Labor supply heterogeneity and demand for child care of mothers with young children', Empirical Economics, vol. 51, no. 4, pp. 1641-1677. https://doi.org/10.1007/s00181-015-1046-4