Volume 27, Number 1 (Winter) 1992
Michalopoulos, Charles, Philip K. Robins, and Irwin Garfinkel. 1992. "A Structural Model of Labor Supply and Child Care Demand." Journal of Human Resources 27(1):166-203.
This paper specifies and estimates a structural model in which the decision to purchase market child care - and the quality purchased - is made simultaneously with the employment decision of the mother. Separate analyses are performed for married mothers and single mothers. The structural estimates are used to simulate the effects and costs of changes in the federal child care tax credit. The simulations indicate that a refundable child care tax credit would distribute child care benefits more equally across the population by increasing the shares of subsidies received by low-income families, and would induce a considerable increase in expenditures on market child care. Labor supply also increases, but by considerably less than child care expenditures. A surprising result is that, despite large increases in child care expenditures, the overall quality of child care does not change very much. The primary beneficiaries of more generous subsidies are current users of high quality free care who are induced to purchase slightly higher-quality market care.
Charles Michalopoulos is a graduate student in economics at the University of Wisconsin - Madison, Philip K. Robins is a professor of economics at the University of Miami, and Irwin Garfinkel is a professor of social work at Columbia University. All three are affiliated with the Institute for Research on Poverty at the University of Wisconsin - Madison. The research reported in this paper was supported by a grant to the Institute for research on Poverty from the U.S. Department of Health and Human Services. The views expressed in this paper are those of the authors and should not be construed as representing the opinions or policies of the Institute or nay agency of the federal government. Earlier versions of this paper were presented in workshops at the University of Wisconsin, the University of Kentucky, and at the annual meetings of the Western Economic Association and the Association for Public Policy and management. The authors wish to acknowledge the helpful comments of Mark Berger, Mark Dynarski, Shelly Lundberg, other workshop participants, and two anonymous referees. The data used in this article may be obtained beginning in June 1992 through June 1995 from Charles Michalopoulos, Department of Economics, University of Wisconsin, Madison, WI 53706.
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