Taxing Childcare: Effects on Family Labor Supply and Children

  • Gathmann Björn Sass C
  • Gathmann C
  • Sass B
 et al. 
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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. JEL-Code: J130, J220, J180.

Author-supplied keywords

  • CESifo Working Paper no. 3776
  • Germany
  • childcare
  • cognitive skills
  • family policy
  • labor supply

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  • Christina Gathmann Björn Sass

  • Christina Gathmann

  • Björn Sass

  • Iwan Barankay

  • Thiess Buettner

  • Janet Currie

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