Demands for Child Care and Household Labour Supply in Australia*

Abstract

Demands for formal and informal child care are estimated using a bivariate Tobit model. Predicted costs of child care are incorporated in the households' budget constraint and a discrete choice labour supply model is estimated. Separate models are estimated for couples and lone parents. Increases in the prices and costs of child care lead to reductions in labour supply for lone parents and partnered mothers. Results suggest the average elasticities in Australia are closer to those found in the UK and are smaller than the estimates for Canada and the US. Effects are stronger for single parents and mothers facing low wages.

Child mortality, commodity price volatility and the resource curse

“…For example, they may attempt to partially offset future changes in household income or expenditures by creating reserves (i.e., savings), or by crosssubsidizing between households (e.g., arrangements for informal group childcare to free up mothers' time for work; see, Blau andRobins, 1988 andDoiron andKalb, 2005). However, these precautionary arrangements (illustrated by the precautionary channel in Figure 2) divert funds from being spent on health and good quality food.…”

Taxes, transfers, family policies and paid work over the female life cycle

“…An elasticity is defined as the percentage change in hours worked per 1 per cent change in cost or price. Table 5.1 presents elasticities as estimated by Doiron and Kalb (2005), Kalb and Lee (2008), Breunig et al (2012), and Breunig et al (2014). Compared to Kalb and Lee (2008), Breunig et al (2012) find larger hours elasticities with regard to child care prices for partnered women of -0.64 on average, indicating a larger impact of the cost of child care on labour supply.…”

“…Compared to Kalb and Lee (2008), Breunig et al (2012) find larger hours elasticities with regard to child care prices for partnered women of -0.64 on average, indicating a larger impact of the cost of child care on labour supply. Breunig et al (2012Breunig et al ( , 2014 do not estimate elasticities for single parents, but Doiron and Kalb (2005) and Kalb and Lee (2008) find that single mothers, especially those with a preschool child and on a low wage, respond more strongly to child care price increases than partnered mothers.…”

“…b) A low wage is defined as a wage below the median wage. For partnered women, the Doiron and Kalb (2005) results considers the woman's wage and her partner's wage at the same time. That is, both need to be below the median value within their group.…”

“…At the same time, quality is likely to influence the price of child care, and the quality of available child care is likely to affect usage by parents. (2008) Doiron and Kalb (2005) and Kalb and Lee (2008), while in Breunig et al (2012Breunig et al ( , 2014 elasticities are computed for a woman with average characteristics. b) A low wage is defined as a wage below the median wage.…”