CHILD SUBSIDIES AND THE CROSS-SECTIONAL FERTILITY PATTERN

This paper studies the effect of different types of child subsidies on the economic allocation and the cross-sectional fertility pattern. I construct a rich but tractable general equilibrium model with overlapping generations of heterogeneous individuals, two sectors of production and a government....

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Veröffentlicht in:Macroeconomic dynamics 2018-07, Vol.22 (5), p.1207-1237
1. Verfasser: Reijnders, Laurie S. M.
Format: Artikel
Sprache:eng
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Zusammenfassung:This paper studies the effect of different types of child subsidies on the economic allocation and the cross-sectional fertility pattern. I construct a rich but tractable general equilibrium model with overlapping generations of heterogeneous individuals, two sectors of production and a government. I derive analytically how fertility choices are affected by changes in household resources and child subsidies and show the numerical results of two policy experiments. A subsidy on childcare favors the birth rates of educated, high-wage individuals. Parents work more so that the subsidy program is partly financed by a rise in labor earnings. In contrast, a lump-sum child allowance stimulates fertility of uneducated, low-wage parents the most. This policy has a larger effect on the average birth rate, but as parents perform most of the care themselves it comes at the expense of a lower supply of labor and a greater tax burden.
ISSN:1365-1005
1469-8056
DOI:10.1017/S1365100516000675