WHY subsidise childcare? The most commonly-heard justification is that doing so will encourage work. Child care is hugely expensive, to the point where it is often better for parents—overwhelmingly, mothers—to look after a child themselves rather than work. “Gender is no longer the factor creating the greatest wage discrepancy in this country, motherhood is”, said Ivanka Trump at the Republican convention, announcing that her father, like Hillary Clinton, would propose a child care-subsidy plan. That plan emerged on September 13th.
At first pass, the economic argument for subsidising child care is a bit iffy. If a mothers’ potential wages reflect her productivity, and if the price of child care reflects the costs of providing it, then there is no economic loss when a mother chooses to stay at home. Take a simplified example: suppose a low-skilled worker can either take a minimum-wage job in Walmart while paying another minimum-wage worker to look after her child, or she can stay at home and care for the child herself. If she stays at home, the second minimum-wage worker takes the Walmart job. Whatever she decides, someone looks after the child, and...Continue reading
Source: United States http://ift.tt/2cuEdg1
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