Child care, parental labor supply and tax revenue

Martin Eckhoff Andresen and Tarjei Havnes

Labour Economics

Front page of journal Labour Economics

Photo: Elsevier

Published in:

Labour Economics, December 2019, Volume 61

Link to the paper

Abstract:

We study the impact of child care for toddlers on the labor supply of mothers and fathers in Norway. For identification, we exploit the staggered expansion across municipalities following a large child care reform from 2002. Our IV-estimates indicate that child care causes an increase in the labor supply of cohabiting mothers who move towards full time employment. Despite this, average taxes paid on the extra income is low, lending little support to the argument that parts of the cost of child care is offset by increased taxes. Meanwhile, we find no impact for fathers.

Published Aug. 12, 2020 10:13 AM - Last modified Sep. 9, 2020 12:29 PM