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Childcare Assistance: Are Subsidies or Tax Credits Better?

Gong, Xiaodong; Breunig, Robert

Description

We evaluate price subsidies and tax credits for childcare. We focus on partnered women's labour supply, household income and welfare, demand for childcare and government expenditure. Using Australian data, we estimate a joint, discrete structural model of labour supply and childcare demand. We introduce two methodological innovations – a more flexible quantity constraint that total formal and informal childcare hours are at least as large as the mother's labour supply and the explicit inclusion...[Show more]

dc.contributor.authorGong, Xiaodong
dc.contributor.authorBreunig, Robert
dc.date.accessioned2017-04-06T06:46:34Z
dc.identifier.issn0143-5671
dc.identifier.urihttp://hdl.handle.net/1885/114512
dc.description.abstractWe evaluate price subsidies and tax credits for childcare. We focus on partnered women's labour supply, household income and welfare, demand for childcare and government expenditure. Using Australian data, we estimate a joint, discrete structural model of labour supply and childcare demand. We introduce two methodological innovations – a more flexible quantity constraint that total formal and informal childcare hours are at least as large as the mother's labour supply and the explicit inclusion of maternal childcare in the utility function as a proxy for child development. We find that tax credits are more effective than subsidies in terms of increasing average hours worked and household income. However, tax credits disproportionately benefit wealthier and more educated women. Price subsidies, while less efficient, have positive redistributional effects
dc.format.mimetypeapplication/pdf
dc.publisherWiley
dc.rights© 2015 Institute for Fiscal Studies.
dc.sourceFiscal Studies
dc.titleChildcare Assistance: Are Subsidies or Tax Credits Better?
dc.typeJournal article
local.identifier.citationvolume38
dc.date.issued2017
local.publisher.urlhttp://au.wiley.com/WileyCDA/
local.type.statusSubmitted Version
local.contributor.affiliationBreunig, R. V., Crawford School of Public Policy, The Australian National University
local.bibliographicCitation.issue1
local.bibliographicCitation.startpage7
local.bibliographicCitation.lastpage48
local.identifier.doi10.1111/1475-5890.12085
dcterms.accessRightsOpen Access
CollectionsANU Research Publications

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