This paper estimates a flexible structural discrete choice model of fertility, work and paid childcare and uses it to simulate and assess the effects of alternative public policies within a unified framework. I use the UK Family Resource Survey data on couple women and EUROMOD, which is the tax benefit microsimulation model of the European Union. The UK has a private childcare system, high childcare costs, falling fertility rate and has not achieved childcare utilization targets. It also has a detailed tax and benefit system which aids identification. I find that all types of labour supply and fertility elasticities are smaller when paid childcare is modelled jointly with fertility and work. The simulations show that only policies which make high quality alternatives to domestic care affordable, like childcare subsidies, can reverse the decline in fertility without adversely affecting female employment, in particular among those at risk of having their first child and the highly educated. Policies which empower women through direct income transfers or higher net wages promote either fertility or employment. The validity of the proposed model is also supported by a swapping policy simulation of the effects of the tax and benefit reforms between 2005 and 2009.
Panayiota Lyssiotou, University of Cyprus (EUROMOD visitor)
Date & time:
31 Jan 2018 13:00 pm - 31 Jan 2018 14:00 pm
2N2.4.16 - ISER Large Seminar Room
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