Tax Credits, Labor Supply, and Child Care

Averett, Susan L.; Peters, H. Elizabeth; Waldman, Donald M.

doi:10.1162/003465397556467

Cited by 117 publications

(95 citation statements)

References 21 publications

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“…We find a wage elasticity with respect to hours worked around 0.6, which is low compared to Averett, Peters and Waldman (1997) on U.S. data, but substantially higher than estimates from the analyses of Canadian data in Powell (1997). However, our estimate for the participation response is lower than Powell's estimate, and higher than estimates in Ribar (1995), based on data from the U.S.…”

Section: Comparison With Findings In the Literaturecontrasting

confidence: 76%

“…Table 5 shows that there is great variation in existing estimates. The child care cost elasticity, which is the most focused measure, varies from -0.02 (Ribar 1995) to -0.92 (Kimmel 1998) with respect to participation, and from -0.32 (Powell 1998) to -0.78 (Averett, Peters and Waldman 1997) with respect to hours worked. Our estimates seem to belong to the "low-response" end of the scale.…”

Section: Comparison With Findings In the Literaturementioning

confidence: 99%

“…Labor supply analyses that encompass child care choices in the decision-making framework include, e.g., Blau and Robins (1988); Ermisch (1989);Hofferth and Wissoker (1992); Connelly (1992); Michalopoulos, Robins and Garfinkel (1992); Gustafsson and Stafford (1992); Ribar (1992Ribar ( , 1995; Averett, Peters and Waldman (1997); Kimmel (1998);Powell (1998); Blau and Hagy (1998).…”

Section: Introductionmentioning

confidence: 99%

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A discrete choice model for labor supply and childcare

2005

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Abstract:A discrete choice model for labor supply and child care for mothers of preschoolers is presented. The mothers are assumed to make choices from a finite set of job possibilities and from a finite set of child care options. The options in the markets for child care are characterized by opening hours, fees and a number of quality attributes, such as mode of care. Similarly, jobs are characterized by a (fixed) wage rate, working hours and a number of variables related to job satisfaction. In the estimation of the model we take into account that the number of options available might vary across work/care combinations, and that some mothers are rationed in the market for care at day care centers. The model is employed to simulate the female labor supply effects of the Norwegian home care allowance reform. Norway aim at improving work incentives for parents. However, they opted for a different approach when a "home care allowance" was introduced in 1998 that strengthen incentives to parents to provide care at home for their young preschoolers. The "home care allowance" gives parents of preschool children aged 1-2 years a transfer in cash, that depends on utilization of public or private day care centers: non-users are eligible to 36,000 Norwegian kroner (about 4,000 U.S. dollars) per year and per child in support, while provisions are scaled down to nil for users of full-time center-based care. 2 In effect, this means a substantial price increase of center-based care relative to the costs of other modes of care, i.e., other paid care and parental care. We expect that this policy change will reduce female labor supply. The total effect on labor supply is, however, not easily assessed since it depends, among other things, on the extent to which parents consider other paid care alternatives as an acceptable substitute for care at centers. KeywordsThe purpose of this paper is to develop and estimate a decision model for female labor supply and child care choices in order to predict the female labor supply responses of this policy change. We focus on mothers since they are assumed to be the primary caregiver and since results from empirical studies suggest that females are more responsive to changes in taxes and transfers than men.3 While traditional models of labor supply focus on the adjustment of hours spent at work and leisure, the literature on child care choices and labor supply emphasises that market work for 1 These figures apply to children 1-5 years old. Thanks to a generous maternity leave provisions, very few children attend day care centers in their first year. Children start school in their sixth year. 2 The term "home care allowance" is in accordance with the terminology used in Ilmakunnas (1997). However, the transfer might rather be characterised as an "out-of-child care center allowance". 3 There are, however, signs of convergence of opinions between the sexes in Norway regarding child care and outside work, which could mean that male income should also be treated as endogenous in future model pr...

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Section: Comparison With Findings In the Literaturecontrasting

confidence: 76%

Section: Comparison With Findings In the Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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A discrete choice model for labor supply and childcare

2005

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“…A number of researchers have estimated the 1 See Lehrer (1983), Connelly (1992), Ribar (1992Ribar ( , 1995. More recently, Averett et al (1997), Powell (1997, 1998a, 1998b and Michalopoulos and Robins (1999) continue to focus on married women.…”

Section: I: Introductionmentioning

confidence: 99%

Marital Status and Full-time/Part-time Work Status in Child Care Choices

Connelly¹,

Kimmel²

2000

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“…3 See Hotz & Kilburn (1991), Hofferth & Wissoker (1992), Blau & Hagy (1998) and Michalopoulos & Robins (1999) 4 See Berger & Black (1992), Michalopoulos, Robins & Garfinkel (1992), Hagy (1998) and Blau & Hagy (1998). 5 See Blau & Robins (1988, 1989, Hotz & Kilburn (1991), Leibowitz, Klerman & Waite (1992), Connelly (1992), Berger & Black (1992), Ribar (1992Ribar ( , 1995, Jenkins & Symons (1995), Kimmel (1995Kimmel ( , 1998, Averett, Peters & Waldman (1997) and Anderson & Levine (1999). 6 See Heckman (1974), Michalopoulos, Robins & Garfinkel (1992), Duncan & Giles (1996) and Michalopoulos & Robins (1999).…”

Section: Introductionmentioning

confidence: 99%

Price and quality in the UK childcare market

Duncan¹,

Paull

Taylor

2001

Working Paper Series

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ACKNOWLEDGEMENTSWe gratefully acknowledge the support of the Nuffield foundation under the project "The effects of local childcare provision and costs on the employment of mothers". We are also grateful to Ian Crawford and Rachel Griffith for comments on an earlier draft and for comments received from seminar participants at the Institute for Fiscal Studies and at Warwick University. AbstractChildcare subsidies are typically advocated as a means to making paid employment profitable for mothers, but also have important ramifications for the use and quality of paid childcare. Even if one is concerned primarily with the quantity aspect, the quality dimension cannot be ignored. This paper provides an exposition of the potential biases in estimates of price elasticities with respect to quantity that do not allow for quality variation or for the possibility of non-linear pricing structures. Using an approach developed in the demand estimation literature, a price measure addressing these issues is derived and the importance of using this measure is tested using British data. Price is found to have a negative impact on the use of formal paid care, the hours purchased and the quality chosen. However, failure to control for quality effects and non-linearities in the price measure is shown to generate significant overestimates of the price elasticities.

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Tax Credits, Labor Supply, and Child Care

Cited by 117 publications

References 21 publications

A discrete choice model for labor supply and childcare

A discrete choice model for labor supply and childcare

Marital Status and Full-time/Part-time Work Status in Child Care Choices

Price and quality in the UK childcare market

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