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Research Paper ImPRovE Working Papers 15/09

The joint decision of labour supply and childcare in Italy under costs and availability constraints


Publication date

Mar 2015


It is widely recognized that childcare has important
pedagogical, economic and social effects on both children and parents. This
paper is the first attempt to estimate a joint structural model of labour
supply and childcare decision applied to Italy. Such an approach is
particularly informative given that it allows one to estimate the changes in
family choices under different policy simulation scenarios, evaluating the
effects on labour supply and childcare usage and the potential consequences for
household income.
We analyse how maternal labour supply and childcare usage
can be affected by relaxing the existing constraints in terms of childcare
availability and costs by considering public, private and informal childcare,
with related imputed availability and costs and their interaction with the
whole tax-benefit system.
Due to the regional differences, costs and effects are
highly differentiated among different areas of the country. Results suggest
that Italian households might alter their childcare and labour supply decisions
substantially if the coverage rate of formal childcare increases, in particular
if the increase would correspond to the increase needed to reach the European
target in the Southern regions. Overall, increasing child care coverage is
estimated to be more effective in enhancing labour incentives than decreasing
existing child care costs, at the same budgetary cost. However, the potential
effects on the disposable income are larger in the latter scenario because
decreasing the childcare costs is beneficial also for women who do not change
their labour supply behaviour.


Labour Economics, Household Economics, Microsimulation, and Caregiving



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