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Childcare Subsidies and Household Labor Supply

Author

Listed:
  • Nezih Guner
  • Remzi Kaygusuz
  • Gustavo Ventura
Abstract
What would be the aggregate effects of adopting a more generous and universal childcare subsidy program in the U.S.? We answer this question in a life-cycle equilibrium model with heterogeneous married and single households with three key features: (i) joint labor-supply of married households along extensive and intensive margins; (ii) heterogeneity in terms of the presence of children across households; (iii) skill losses of females associated to non participation. We find that subsidies have substantial effects on female labor supply and lead to a large reallocation of hours worked from males to females. Fully subsidized childcare available to all households leads to long-run increases in the participation of married females and total hours worked by about 10.1% and 1.0%, respectively, and to a decline of male hours by 1.5%. There are large differences across households in welfare gains, as a small number of households -poorer households with children - gain significantly while others lose. Welfare gains of newborn households amount to 1.9%.

Suggested Citation

  • Nezih Guner & Remzi Kaygusuz & Gustavo Ventura, 2013. "Childcare Subsidies and Household Labor Supply," Working Papers 738, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:738
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Childcare Subsidies and Household Labor Supply
      by Christian Zimmermann in NEP-DGE blog on 2014-08-07 19:08:18

    Citations

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    Cited by:

    1. Doepke, M. & Tertilt, M., 2016. "Families in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1789-1891, Elsevier.
    2. Nezih Guner & Ezgi Kaya & Virginia Sánchez-Marcos, 2014. "Gender gaps in Spain: policies and outcomes over the last three decades," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(1), pages 61-103, March.
    3. Johanna Wallenius & Tobias Laun, 2016. "Home and Market Hours, Human Capital Accumulation and Fertility," 2016 Meeting Papers 518, Society for Economic Dynamics.
    4. Andreas Thiemann, 2015. "Pension Wealth and Maternal Employment: Evidence from a Reform of the German Child Care Pension Benefit," Discussion Papers of DIW Berlin 1499, DIW Berlin, German Institute for Economic Research.
    5. Gerhard Glomm & Volker Meier, 2016. "Modes of Child Care," CESifo Working Paper Series 6287, CESifo.
    6. Jeremy Greenwood & Nezih Guner & Guillaume Vandenbroucke, 2017. "Family Economics Writ Large," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1346-1434, December.
    7. repec:dgr:rugsom:14007-eef is not listed on IDEAS
    8. Ho Christine, 2019. "Optimal Disability Insurance with Informal Child Care," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(2), pages 1-42, April.
    9. Tobias Laun & Johanna Wallenius, 2021. "Having It All? Employment, Earnings, and Children," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 353-381, January.
    10. Reijnders, Laurie S.M., 2014. "Child care subsidies with endogenous education and fertility," Research Report 14007-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

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    More about this item

    Keywords

    childcare; household labor supply;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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