Child care workers' wages: New evidence on returns to education, experience, job tenure and auspice

Child care workers receive low hourly pay, modest returns to education, experience and job tenure, and have high rates of turnover. These stylized facts have caused analysts to characterize child care workers as secondary labour market participants. We use Canadian data to challenge this characterization and to examine the disputed effects of auspice (non-profit vs. for-profit status) on wages. In contrast to Mocan and Viola (1997), improved controls for the differential availability of resources and firm size do not make the positive wage effects experienced by workers in non-profit day care centres disappear. Received: 7 February 2000/Accepted: 1 August 2001     

Uncertain lifetime, fertility and social security

Investigating the effects of population aging on fertility and economic growth, we show that an increase in life expectancy lowers the fertility rate and raises life-cycle savings, and that a pay-as-you-go social security does not reverse the effect on fertility. Received: 10 March 2000/Accepted: 28 April 2000     

Labor supply responses and welfare effects from replacing current tax rules by a flat tax: Empirical evidence from Italy, Norway and Sweden

This paper employs a microeconometric framework to examine the labor supply responses and the welfare effects from replacing current tax systems in Italy, Norway and Sweden by a flat tax on total income. The flat tax rates are determined so that the tax revenues are equal to the revenues as of 1992. The flat tax rates vary from 23 per cent in Italy, 25 per cent in Norway, to 29 per cent in Sweden. In all three countries the labor supply responses decline sharply with pre-reform disposable income. The results show that the efficiency costs of the current tax systems relative to a flat tax may be rather high in Norway and much lower, but positive, in Italy and Sweden. In all three countries “rich” households – defined by their pre-tax-reform income – tend to benefit (in terms of welfare) more than “poor” households. In Italy and Sweden a majority will lose from a shift to a flat tax, while in Norway a majority is predicted to win. Received: 19 May 1998/Accepted: 02 July 1999     

Who takes care of the children? The quantity-quality model revisited

We study the Becker and Lewis (1973) quantity-quality model of children adding an explicit child care time constraint for parents. Parents can take care of the children themselves or purchase day care. Our results are: (i) If there only is own care, a quantity-quality trade-off, different from that of Becker and Lewis (1973), arises. The income effect on fertility is positive if child quantity is a closer complement than child quality to the consumption of goods. (ii) If, instead, there is a combination of purchased and own care, the effect of income on fertility is ambiguous, even if quantity of children is a normal good in the standard sense. This is the Becker and Lewis (1973) result extended to a situation with a binding child care time constraint. The conclusion is that the Becker and Lewis (1973) result holds as long as at least some child care is purchased. Received: 12 November 1999/Accepted: 1 September 2000     

Child care, women's employment, and child outcomes

This paper reviews the evidence on the impact of child care and maternal employment in the pre-school years on child outcomes. This topic has long been of interest to economists, developmental psychologists, and scholars from other disciplines, and has been the focus of increased attention in recent years, as research has provided additional evidence about the processes of development in the earliest days, weeks, and years of life.¹  In this paper, I review the evidence on two broad sets of questions: what we know about the potential benefits of early intervention child care programs, and what we know about the effects (whether positive or negative) of maternal employment and child care in the first years of life. The evidence reviewed in this paper suggests that we now know a good deal about both sets of questions. But, this review also suggests that there are important gaps in our knowledge that future work by economists could fruitfully address. Received: 9 December 1999/Accepted: 20 September 2000     

The allocation and value of time assigned to housework and child-care: An analysis for Switzerland

In this paper, data from the 1997 Swiss Labour Force Survey are used to analyse the allocation and value of time assigned to housework and child-care. It is shown that men's allocation of time to housework and child-care is largely invariant to changes in socio-economic factors. Women's allocation of time to housework and child-care, on the other hand, is shown to depend on several social, economic, and demographic factors. The value of time assigned to housework and child-care is calculated with two market replacement cost methods and three opportunity cost methods. The results show that the value of time assigned to housework and child-care ranges from 27% to 39% and from 5% to 8% of GDP (in 1997), respectively. The value of time assigned to housework and child-care is also calculated for different household structures. Received: 15 April 1999/Accepted: 5 May 2000     

Wages, employment and economic shocks: Evidence from Indonesia

After over a quarter century of sustained economic growth, Indonesia was struck by a large and unanticipated crisis at the end of the 20th Century. Real GDP declined by about 12% in 1998. Using 13 years of annual labor force data in conjunction with two waves of a household panel, the Indonesia Family Life Survey (IFLS), this paper examines the impact of the crisis on labor market outcomes. Received: 31 December 1999/Accepted: 3 August 2000     

Voluntary income sharing and the design of unemployment insurance

This paper uses a model of search unemployment to discuss the interaction between publicly provided insurance and informal insurance through voluntary income sharing, e.g., between spouses. Income sharing reduces the optimal level of public unemployment insurance. While it is always individually rational for partners to share income, the effect of voluntary income sharing on welfare will be negative unless partners can either observe each other's search behavior or are sufficiently altruistic towards each other. The model is also used to examine a family-based policy. The welfare gains from using such policy are argued to be small. Received: 14 December 2000/Accepted: 5 November 2001     

The empowerment of women,fertility, and child mortality: Towards a theoretical analysis

This paper examines one avenue through which female autonomy impinges on fertility and child mortality in developing countries. A simple model is set out in which couples are motivated to have children for old age security purposes. The decisions of a couple regarding fertility and allocation of resources for the healthcare of their children are made within a bargaining framework. An increase in female autonomy translating into an increase in the relative bargaining power or the threat point utility of mothers is shown to reduce fertility and also to reduce child mortality rates. Paradoxically, the increase in female autonomy within a household may increase the disadvantage suffered by female children in that household with respect to survival. Received: 4 August 1999/Accepted: 7 September 2000     

Teenage childbearing and cognitive development

In this paper we examine how having a child as a teen affects the cognitive development of young women as measured on standardized tests. The research in this paper makes use of the National Education Longitudinal Study of 1988, a biennial survey that contains information on a cohort of young women from the time they were in the 8th grade in 1988 until, the latest wave, 1994. By observing two test scores before a woman has a child and one test score after, we can control for both the level and growth in test scores experienced prior to childbirth. The results indicate that although teenage mothers have lower cognitive test scores than their counterparts without children, the effects of childbearing itself are negligible. Received: 23 August 2000/Accepted: 02 January 2001     

Estimating intrahousehold allocation in a collective model with household production

The purpose of this paper is to estimate the intra-family distribution of income and the individual demand for leisure and household production from Swedish cross-sectional household data. As a basis for the analysis, we use a collective model where each individual is characterized by his or her own utility function and divides total time between leisure, household production and market work. For the purpose of comparison, we also estimate a version that is consistent with a more traditional model of labor supply, the unitary model. Received: 14 April 2000/Accepted: 12 January 2001     

Family size and optimal income taxation

This paper studies the role of family size in the design of optimal income taxation. We consider a second best setting where the government observes the number of children and the income of the parents but not their productivity. With a linear tax schedule the marginal tax rate is shown to decrease with the number of children, while the relationship between the demogrant and family size appears to be ambiguous. With two ability levels, optimal non-linear income tax implies zero marginal tax rates for the higher ability parents; low ability parents have positive marginal tax rates that decrease with family size. Received: 4 September 2000/Accepted: 17 May 2001     

Male-female differences in labor market outcomes during the early transition to market: The cases of Estonia and Slovenia

Changes in women's relative wages and employment are analyzed, using social security data from Slovenia (1987–1992) and a retrospective labor force survey in Estonia (1989–1994). Estonia adopted liberal labor market policies. Slovenia took an interventionist approach. Nevertheless, relative wages for women rose in both countries. Factors favoring women included: returns to human capital rose in transition, benefiting women; relative labor demand shifted toward predominantly female sectors; low-wage women had a disproportionate incentive to exit the labor market, especially in Estonia. However, women were less mobile across jobs in both countries, so men disproportionately filled new jobs in expanding sectors. Received: 27 November 1997/Accepted: 20 December 1998     

Intergenerational redistribution in a small open economy with endogenous fertility

For pay-as-you-go financed pension systems, claims may be calculated according to individual contributions (income) or the number of children of a family. We analyse the optimal structure of these parameters in a model with endogenous fertility. It is shown that for both structural determinants there exists no interior solution of the problem of intragenerational utility maximisation. Thus, pure systems are always welfare maximizing. Furthermore, children-related pension claims induce a fiscal externality that tends to be positive. The determination of the optimal contribution rate shows that the widely accepted Aaron-condition is in general a misleading indicator for the comparison of fully funded and pay-as-you-go financed pension systems. Received March 12, 1996 / Accepted January 27, 1997     

The cost of children: May the collective approach to household behavior help?

The collective approach to household consumption behavior tries to infer from variables supposed to affect the general bargaining position of household members information on the allocation of consumptions goods and tasks among them. This paper investigates the extension of previous work to the case where children may be considered as a public consumption good by the two adult members of a household. The main question being asked is whether it is possible to retrieve from the aggregate consumption behaviour of the household and the relative earnings of the parents information on the allocation of goods between them and children. This alternative approach to the estimation of the ‘cost of children’ is contrasted with the conventional approach based on a ‘unitary’ representation of and demographic separability assumptions on household consumption behaviour. Received: 29 August 1997/Accepted: 26 November 1998     

On private incentives to acquire household production skills

In non-cooperative family models, being good at contributing to family public goods like household production may reduce one's utility, since it tends to crowd out contributions from one's spouse. Similar effects also arise in cooperative models with non-cooperative threat point: improved contribution productivity entails loss of bargaining power. This strategic effect must be traded against the benefits of household production skills, in terms of increased consumption possibilities. Since cooperation involves extensive specialization, incentives to acquire household production skills are strikingly asymmetric, with the one not specializing in household production having strong disincentives for household skill acquisition. Received: 06 July 1999/Accepted: 08 June 2000     

Welfare generosity, pregnancies and abortions among unmarried AFDC recipients

Even before the 1996 overhaul of the U.S. welfare system, a number of states had ended the practice of paying extra benefits to families who have additional children while receiving welfare. Proponents believe that this reform can reduce births to recipients, however many worry that it may encourage women to obtain abortions. Using a sample of unmarried AFDC recipients from the NLSY, we estimate a bivariate probit model of pregnancy and, conditional on becoming pregnant, the probability of abortion. Our results lend some support for the proposition that reducing incremental AFDC benefits will decrease pregnancies without increasing abortions. Received: 16 April 1998/Accepted: 11 March 1999     

Employment and child-care choices of single-parent families in Canada and the United States

This paper examines employment and child-care choices of single-parent families with young children in the United States and Canada, using a pooled data set based on recent national surveys in each country. We find that the employment and child-care choices of Canadian families are similar to those of U.S. families. Estimates of a model of employment and child-care choices indicate significant effects of child-care subsidies, child-care prices, and wage rates on employment and child-care choices. Received: 1 February 2000/Accepted: 15 January 2001     

Running hard and falling behind: a welfare analysis of two-earner families

This paper investigates the commonly asserted proposition that long term economic changes have put the family in a financial bind. Structural parameters of a family utility model are obtained by estimating simultaneous labor supply functions for a two-earner household. We find evidence indicating that the average 1990‘s two-earner family would prefer to receive the 1980‘s real wage package (were it available) instead of the real wage package it actually faces. The degree to which the 1990‘s family is worse off (in terms of the changes in the real wage package) is roughly equivalent to an hour of leisure per week. Received September 25, 1995 / Accepted February 5, 1997     

Effect of childbearing on Filipino women's work hours and earnings

The effects of childbearing and work sector on women's hours and earnings in the 8 years following an index pregnancy were examined in a cohort of more than 2,000 women in the Cebu Longitudinal Health and Nutrition Survey. Change in cash earnings and hours worked were each modeled jointly with sector of labor force participation using an estimation strategy that deals with endogeneity of childbearing decisions and selectivity into sector of work. Two or more additional children born in the 8 year interval significantly reduced women's earnings, while having an additional child under 2 years of age in 1991 reduced hours worked. Received: 16 July 1998/Accepted: 22 March 2001 All correspondence to Linda Adair. The authors wish to thank Family Health International and the U.S. Agency for International Development (USAID) for their generous support. This publication was funded by USAID under Cooperative Agreement USAID/CCP-3060-A-00-3021-00 to Family Health International (FHI). David Guilkey's participation in this paper was also supported by the MEASURE Evaluation Project also with support from the United States Agency for International Development (USAID) under Contract Number HRN-A-00-97-00018-00. The conclusions expressed in this report do not necessarily reflect the policies of FHI or USAID. Helpful comments by two anonymous referees are gratefully acknowledged. Responsible editor: T. Paul Schultz.