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dc.contributor.authorDomeij, Daviden
dc.contributor.authorKlein, Paulen
dc.date.accessioned2012-02-14-
dc.date.accessioned2012-03-28T13:04:05Z-
dc.date.available2012-03-28T13:04:05Z-
dc.date.issued2010-
dc.identifier.urihttp://hdl.handle.net/10419/56128-
dc.description.abstractIn an economy with distortionary taxes on labor, can subsidies on day care, financed by an increase in taxes, raise welfare by encouraging women with small children to work? We show, within a heterogeneous-agent life-cycle framework, that the Ramsey optimal policy consists in equalizing consumption/leisure wedges over the life cycle and across agents. A simple way to implement this is to make day care expenses tax deductible. Calibrating our model to Germany, we find that tax deductibility for day care expenses leads to an approximate doubling of labor supply for both married and single mothers with small children. The overall welfare gain from optimal reform corresponds to a 1.0 percent increase in consumption.en
dc.language.isoengen
dc.publisher|aStockholm School of Economics, The Economic Research Institute (EFI) |cStockholmen
dc.relation.ispartofseries|aSSE/EFI Working Paper Series in Economics and Finance |x729en
dc.subject.jelE13en
dc.subject.jelJ13en
dc.subject.ddc330en
dc.subject.keywordFemale labor force participationen
dc.subject.keywordGermanyen
dc.subject.keywordday care subsidiesen
dc.subject.stwWeibliche Arbeitskräfteen
dc.subject.stwFamilienleistungsausgleichen
dc.subject.stwWohlfahrtseffekten
dc.subject.stwLebenszyklusen
dc.subject.stwDeutschlanden
dc.titleShould day care be subsidized?-
dc.typeWorking Paperen
dc.identifier.ppn629820163en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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