Taxing Childcare: Effects on Childcare Choices, Family Labor Supply and Children

43 Pages Posted: 5 Jun 2017

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)

Abstract

Previous studies report a range of estimates for the response of female labor supply and childcare attendance to childcare prices. We shed new light on these questions using a policy reform that raises the price of public daycare. After the reform, children are 8 percentage points less likely to attend public daycare which implies a compensated price elasticity of -0.6. There is little labor supply response in the full sample, though declines for vulnerable subgroups. Spillover effects on older siblings and fertility decisions show that the policy affects the whole household, not just targeted family members.

Keywords: childcare, family policy, female labor supply, Germany

JEL Classification: J13, J22, J18

Suggested Citation

Gathmann, Christina and Sass, Björn, Taxing Childcare: Effects on Childcare Choices, Family Labor Supply and Children. IZA Discussion Paper No. 10813. Available at SSRN: https://ssrn.com/abstract=2979960

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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