scholarly journals Child Care Subsidies, Quality, and Optimal Income Taxation

2020 ◽  
Vol 12 (4) ◽  
pp. 1-37
Author(s):  
Spencer Bastani ◽  
Sören Blomquist ◽  
Luca Micheletto
Keyword(s):  
Child Care ◽  
Policy Instruments ◽  
Quantitative Model ◽  
Child Care Subsidies ◽  
Public Provision ◽  
Optimal Income Taxation ◽  
Care Services ◽  
Us Economy ◽  
The Us ◽  
Study Child

We study child care subsidies in a Mirrleesian optimal tax framework where parents choose both the quantity and quality of child care. Child care services not only enable parents to work, but also contribute to children’s human capital. We examine the conditions under which child care expenditures should be encouraged or discouraged by the tax system under different assumptions regarding the available policy instruments. Using a quantitative model calibrated to the US economy, we illustrate the possibility that child care expenditures should be taxed rather than subsidized, and we discuss the merits of public provision schemes for child care. (JEL H21, H24, H41, J13)

scholarly journals Efficient Child Care Subsidies

2020 ◽  
Vol 110 (1) ◽  
pp. 162-199 ◽  
Author(s):  
Christine Ho ◽  
Nicola Pavoni
Keyword(s):  
Child Care ◽  
Low Income ◽  
The United States ◽  
Tax Rates ◽  
Child Care Subsidies ◽  
Optimal Program ◽  
The Us ◽  
Marginal Tax Rates ◽  
Welfare Problem ◽  
Care Costs

We study the design of child care subsidies in an optimal welfare problem with heterogeneous private market productivities. The optimal subsidy schedule is qualitatively similar to the existing US scheme. Efficiency mandates a subsidy on formal child care costs, with higher subsidies paid to lower income earners and a kink as a function of child care expenditure. Marginal labor income tax rates are set lower than the labor wedges, with the potential to generate negative marginal tax rates. We calibrate our simple model to features of the US labor market and focus on single mothers with children aged below 6. The optimal program provides stronger participation but milder intensive margin incentives for low-income earners with subsidy rates starting very high and decreasing with income more steeply than those in the United States. (JEL D82, H21, H24, J13, J16, J32)

scholarly journals Optimal Labor-Market Policy in Recessions

2015 ◽  
Vol 7 (2) ◽  
pp. 124-156 ◽  
Author(s):  
Philip Jung ◽  
Keith Kuester
Keyword(s):  
Labor Market ◽  
Policy Instruments ◽  
Unemployment Benefits ◽  
Labor Market Policy ◽  
Market Policy ◽  
Us Economy ◽  
The Us ◽  
Optimal Mix ◽  
The Business Cycle ◽  
Analytical Expressions

Within a search and matching model with risk-averse workers, endogenous hiring and separation, and unobservable search effort, we show how to decentralize the constrained-efficient allocation by a combination of a production tax and three labor-market policy instruments: vacancy subsidies, layoff taxes, and unemployment benefits. We derive analytical expressions for the optimal mix of these over the business cycle. Calibrating the model to the US economy under the assumption that wages are rigid, we find that hiring subsidies and layoff taxes should rise considerably and persistently in recessions. The optimal variation in unemployment benefits, in contrast, is quantitatively small and short-lived. (JEL E24, E32, J24, J63, J64, J65)

Child Care in the United States and Industrialized Nations

PEDIATRICS ◽  
1994 ◽  
Vol 94 (6) ◽  
pp. 1081-1083
Author(s):  
Carollee Howes ◽  
Kristin Droege
Keyword(s):  
Child Care ◽  
Low Income ◽  
Parental Leave ◽  
The United States ◽  
National Standards ◽  
Care Services ◽  
Industrialized Nations ◽  
The Us ◽  
Care Systems ◽  
Child Care Services

Although the US does subsidize a portion of child-care services via tax credits for the middle class and subsidized care for low-income families, it has no parental-leave policy, no national system of child-care services, and no national standards of quality. This nonsystem of child care is in great contrast to the situation in most industrialized nations, which do have parental-leave and child-care systems with quality standards acceptable to most American experts. We believe that the greatest obstacle to such a system within the US lies in the premise that children are the responsibility of individual families and that responsible mothers will remain home to care for them. This is ironic in a country that claims to believe in diversity and parental choice. Our nonsystem of child care fails to serve the diverse needs of families and greatly restricts parents' choices.

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