Melbourne Institute of Applied Economic and Social Research - Research Publications

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Demands for childcare and household labour supply in Australia

DOIRON, DJ ; KALB, GR (Blackwell Publishing Inc., 2005)

Demands for formal and informal child care are estimated using a bivariate Tobit model. Predicted costs of child care are incorporated in the households’ budget constraint and a discrete choice labour supply model is estimated. Separate models are estimated for couples and lone parents. Increases in the prices and costs of child care lead to reductions in labour supply for lone parents and partnered mothers. Results suggest the average elasticities in Australia are closer to those found in the UK and are smaller than the estimates for Canada and the US. Effects are stronger for single parents and mothers facing low wages.