Working Paper: CEPR ID: DP9775
Authors: Nezih Guner; Remzi Kaygusuz; Gustavo Ventura
Abstract: What would be the aggregate effects of adopting a more generous and universal childcare subsidy program in the U.S.? We answer this question in a life-cycle equilibrium model with heterogeneous married and single households with three key features: (i) joint labor-supply of married households along extensive and intensive margins; (ii) heterogeneity in terms of the presence of children across households; (iii) skill losses of females associated to non participation. We find that subsidies have substantial effects on female labor supply and lead to a large reallocation of hours worked from males to females. Fully subsidized childcare available to all households leads to longrun increases in the participation of married females and total hours worked by about 10.1% and 1.0%, respectively, and to a decline of male hours by 1.5%. There are large differences across households in welfare gains, as a small number of households?poorer households with children? gain significantly while others lose. Welfare gains of newborn households amount to 1.9%.
Keywords: childcare; household labor supply
JEL Codes: E62; H24; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| childcare subsidies (J13) | married female participation (D13) |
| childcare subsidies (J13) | total hours worked (J22) |
| childcare subsidies (J13) | male hours (J16) |
| childcare subsidies (J13) | welfare gains for newborn households (D69) |
| childcare subsidies (J13) | gender wage gap for women with high school education (I24) |