A Structural Model of Labor Supply and Child Care Demand

This paper provides field evidence on how reference points adjust, a degree of freedom in reference-dependence models. Examining this in the context of cabdrivers’ daily labor-supply behavior, we ask how the within-day timing of earnings affects decisions. Drivers work less in response to higher accumulated income, with a strong effect for recent earnings that gradually diminishes for earlier earnings. We estimate a structural model in which drivers work toward a reference point that adjusts to deviations from expected earnings with a lag. This dynamic view of reference dependence reconciles conflicting “neoclassical” and “behavioral” interpretations of evidence on daily labor-supply decisions. (JEL J22, J31, L94)

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Child‐Care Policy and the Labor Supply of Mothers with Young Children: A Natural Experiment from Canada

Journal of Labor Economics ◽

10.1086/587760 ◽

2008 ◽

Vol 26 (3) ◽

pp. 519-548 ◽

Cited By ~ 146

Author(s):

Pierre Lefebvre ◽

Philip Merrigan

Keyword(s):

Child Care ◽

Young Children ◽

Labor Supply ◽

Natural Experiment ◽

Child Care Policy ◽

Care Policy

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A Single Parent’s Labor Supply: Evaluating Different Child Care Fees within an Intertemporal Framework

The B E Journal of Theoretical Economics ◽

10.1515/bejte-2012-0026 ◽

2014 ◽

Vol 14 (1) ◽

pp. 177-215

Author(s):

Junichi Minagawa ◽

Thorsten Upmann

Keyword(s):

Child Care ◽

Labor Supply ◽

Time Allocation ◽

Performance Level ◽

Trade Off ◽

Optimal Decisions ◽

Care Services ◽

Care Policies ◽

Child Care Services

AbstractIn this paper, we present a model of a one-parent, one-child household where parental decisions on labor supply, leisure, and the demand for parental and public child care are simultaneously endogenized and intertemporally determined. We characterize the path of the optimal decisions and investigate the effects of various public child care fees and of the quality of public child care services on the parent’s time allocation and the child’s performance level. Our results show that different public child care policies may induce substantially diverging effects and reveal that each policy frequently faces a trade off between an encouragement of labor supply and an enhancement of the child’s performance. In addition, we find that, from an efficiency perspective, an income-based fee levied on public child care services is dominated by both a flat fee and a use-based fee system.

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