Labour Supply and Childcare: Allowing Both Parents to Choose

35 Pages Posted: 12 Aug 2019

See all articles by Karen Mumford

Karen Mumford

University of York (UK); IZA Institute of Labor Economics; CAMA

Antonia Parera-Nicolau

Universitat de les Illes Balears - Departament d'Economia Aplicada

Yolanda Pena-Boquete

University of Vigo

Abstract

We develop and estimate a structural model of labour supply for two parent families in Australia, taking explicit account of the importance of childcare related variables. Our main contribution is to consider the labour supply decisions of both parents and their choice of childcare simultaneously. Labour supply decisions of mothers are found to be substantially more responsive to changes in their own wage (at intensive and extensive margins) than is the case for fathers, with minimal cross-wage labour supply responses from fathers. Our results imply that policies increasing the wage of mothers will be associated with marked increases in labour market participation and in the working hours of mothers in the Australian labour market, with little offsetting decline in the labour supply of fathers.

Keywords: childcare, parental labour supply, discrete, unitary

JEL Classification: J00, J13, J22

Suggested Citation

Mumford, Karen A. and Parera-Nicolau, Antonia and Pena-Boquete, Yolanda, Labour Supply and Childcare: Allowing Both Parents to Choose. IZA Discussion Paper No. 12500. Available at SSRN: https://ssrn.com/abstract=3435375

Karen A. Mumford (Contact Author)

University of York (UK) ( email )

Heslington
York YO10 5DD
United Kingdom

IZA Institute of Labor Economics

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

CAMA ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

Antonia Parera-Nicolau

Universitat de les Illes Balears - Departament d'Economia Aplicada ( email )

Crta. de Valldemossa km 7,5
07122 Palma
Spain

Yolanda Pena-Boquete

University of Vigo ( email )

E.U. de Enx. T├ęcn. Industrial.
Vigo, E-36200
Spain

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