DP238 | Purchased Child Care, Optimal Family Size and Mother's Employment


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The paper develops a model of family size decisions in which couples choose explicitly a combination of mother's time and purchased child care (e.g. childminders, nannies) for the care and rearing of children. The theoretical model implies that the impact of the mother's wage on her completed fertility varies with the market price of child care, and that this effect increases (becoming less negative or more positive) with the level of her wage. Econometric analysis of British micro-data confirms the main predictions of the model.