Demands for Childcare and Household Labour Supply in Australia

Melbourne Institute Working Paper No. 06/04

Date: April 2004


Denise Doiron
Guyonne Kalb


Demands for formal and informal childcare are estimated using a bivariate Tobit model. Predicted costs of childcare are incorporated in the households budget constraints 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 childcare 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 U.K. and are smaller than the estimates for Canada and the U.S. Effects are stronger for single parents and mothers facing low wages.

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