Taxing Childcare: Effects on Family Labor Supply and Children

51 Pages Posted: 31 Mar 2012

See all articles by Christina Gathmann

Christina Gathmann

Alfred-Weber Institut; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Björn Sass

University of Mannheim - School of Economics (VWL)

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Abstract

Previous studies report a wide range of estimates for how female labor supply responds to childcare prices. We shed new light on this question using a reform that raised the prices of public daycare. Parents respond by reducing public daycare and increasing childcare at home. Parents also reduce informal childcare indicating that public daycare and informal childcare are complements. Female labor force participation declines and the response is strongest for single parents and low-income households. The short-run effects on cognitive and non-cognitive skills are mixed, but negative for girls. Spillover effects on older siblings suggest that the policy affects the whole household, not just targeted family members.

Keywords: childcare, labor supply, cognitive skills, family policy, Germany

JEL Classification: J13, J22, J18

Suggested Citation

Gathmann, Christina and Sass, Björn, Taxing Childcare: Effects on Family Labor Supply and Children. IZA Discussion Paper No. 6440. Available at SSRN: https://ssrn.com/abstract=2032008

Christina Gathmann (Contact Author)

Alfred-Weber Institut ( email )

Bergheimer Str. 20
Heidelberg, 69115
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/index_html?lang=en&mainframe=http%3A//www.iza.org/en/webcontent/personnel/photos%

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.stanford.edu/~cgathman

Björn Sass

University of Mannheim - School of Economics (VWL) ( email )

Mannheim 68131
Germany

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