Impact of child care support on female labor supply,
family income and public finance
Nicholas-James Clavet and Jean-Yves Duclos
CIRPÉE, Université Laval
May 2011
Preliminary — please do not quote
Abstract
We study in this paper the impact of child care support on female labor force
participation, family income, and public finance in Quebec (Canada). We first estimate the determinants of female labor supply using a conditional logit. We then
simulate the effects of withdrawing existing child care support measures (federal
tax deduction, provincial tax credit and child care in-kind support) and of the implementation of recent and alternative child care support measures. Outcomes are
heterogenous with family structure and child care support measures. The results
show that child care support has a significative effect on female labor supply, family income and public finance. The federal tax deduction, the provincial tax credit
and in-kind child care support increase female labor supply and family income but
deteriorate public finance. Withdrawing child care support totally would induce a
significant fall in labor supply and in family income and an improvement in public
finance. Finally, a universal child care allowance would increase labor supply and
family income but would worsen public finance — the opposite effect would be
observed following a reduction in in-kind child care support.
Acknowledgements
This research was supported by the Fonds Québécois de Recherche sur la Société
1
et la Culture (FQRSC) as part of a concerted program on the assessment of the
impacts of public policy on health and well-being. We are grateful to FQRSC and
to its partners, the Ministry of Health and Social Services and the Health Research
Fund, for their support.
1
Introduction
Many of North America’s children nowadays receive child care outside their home. For
example, 80 % of Quebec’s children aged between 3 and 5 receive regular child care
(Japel, Tremblay, et Côté 2005) outside their home. This large prevalence of nonparental child care naturally questions the influence of child care on the lives of families
and on parental work habits in particular.
The issue of child care is also high on the agenda of policy makers. It has been
seriously debated in Canada’s last provincial and federal election campaigns. For the
last few years, the federal government has been directing transfers to families with
preschoolers for the stated purpose of assisting families with child care responsibilities. In
Quebec, the different major political parties have tended to favor different modalities for
supporting child care, ranging from direct monetary transfers to parents, to development
of highly subsidized public “Early Childhood Centers” (ECC), to fiscal relief towards the
burden of child care expenditures, and to the encouragement of the provision of private
child care services.
The Quebec government has also been investing substantial resources in the establishment and maintenance of child care services (see Ministère de la famille et de l’enfance
2002), of which ECC are the primary delivery modality. Although these child care services are offered within a network that is purportedly universal, it is instructive to note
that the distribution of these services differs very much across family types and living
standards — especially since it suggests that the least-advantaged families are also those
that are least likely to receive such forms of child care support (Grenier 2005).
The issue of the effects of child care support in Quebec is also connected to the fast
increase in female labor participation rate over the past decades. This transformation has
had a significant impact on families, partly because they are sometimes headed by low
income single females. In recent years, government policies have also been extensively
redesigned to encourage the participation of as many people as possible in the labor
market, including that of single mothers and of both parents of preschool children. The
child care issue is therefore at the heart of multiple effects and objectives, including
supporting family incomes and the well-being of children as well as encouraging female
labor market participation.
This article aims to study the effects of child care support in Quebec on female
labor force participation, income families, and public finance. We do this by using a
microsimulation model that takes into account the complexity of the system of taxes
and of various income support measures, and the fact the effects of that system affect
a widely heterogeneous population of individuals and households — see e.g. Gupta et
1
Kapur (2000), Harding (1996), and OECD (2004) for a discussion of these models. The
model is of an accounting, distributive and behavioral type since it allows to simulate
the impact of existing and/or prospective elements of the tax and transfer system on
the distribution of living standards as well as on labor supply of families.
The two main types of measures to support families — unconditional allowances to
parents and (conditional on labor force participation) child care support measures —
have theoretical effects that are qualitatively different from one another. Relative to
a scenario of no family support, family allowances to parents lead to an income effect
(an increase of disposable income) that tends to reduce parental participation in the
labor market. Subsidies (conditional on participation in the labor market) to child care
introduce both a price effect (an increase in hourly wages net of child care expenses)
that encourages participation and an income effect that tends to reduce participation.
The value and the impact of child care subsidies also differ significantly by income
and the provision mode of these subsidies — they depend for example on whether they
are paid directly to families in the form of a refundable or a non-refundable tax credit
or as a deduction from taxable income. The effects of these types of policies on labor
supply also depend on the interaction between price and income labor supply elasticities
as well as on the wage distribution and on activity levels in the population. Estimating
precisely these empirical effects requires a detailed modeling of these elements; this is
what we do in this article. This also allows us to examine how different forms of family
support may differentially affect the net income of families.
The microsimulation model used in this article shows that the child care tax credits and deductions coupled with ECC significantly increase family income after taxes,
transfers and child care costs. Supporting child care also has a greater impact on the
net incomes of single mothers than on those of “married women” (namely, women living
in a couple).
2
Model
The model used in this article seeks to evaluate first the effects of the current system
of child care support on household income, the labor market behavior of mothers with
preschool children (between 0 and 4 years), and the finances of provincial and federal
governments. The model also allows to quantify the impact of potential changes to child
care support. A description of current and alternative child care support modalities
system is presented in Table 1. More precise definitions and the costs of the different
child care support modalities are presented in Tables 2 and 3.
The model is based on an accounting, distributive and behavioral structure. Using
2
socio-economic information on a representative set of households, income profiles before
and after taxes and transfers are first computed.1 Since family policies in connection
with child care are of particular interest, child care costs are subtracted from income
after taxes and transfers (usually called disposable income by Statistics Canada) to
obtain a income net of taxes, transfers and child care expenses. Net income varies
depending on the type of child care since the costs of these types of child care vary.
The probability of making a given choice of labor supply is estimated econometrically
through the observation of the choices made by working women in our representative
sample.
Table 1: Definition of child care support measures
Type
Definition
Provincial Tax Credit
Amount deducted from the provincial tax payable
(See Appendix A for table
and refundable if the credit exceeds
of credits)
the amount of provincial tax otherwise due.
Federal Tax Deduction
Amount deducted from federal taxable income.
Direct subsidy to ECC
These grants take the form of direct grants to ECC;
a family contribution of $7 a day is then paid.
Note that only full-time (260 days) or part-time
(130 days) care is available with ECC.
Fam. allowance (alternative measure)
$100 per week paid directly
to families for each child under 5 years.
Direct subsidies to ECC are then removed
and the total cost of ECC child care
must then be paid by the family.
ECC rate increase (alternative measure) Fees for ECC increase from $7
to $10 a day, with a consequent reduction of the
government direct grant.
Universal benefit (recent measure)
$100 a month paid directly by federal government
to families for each child under 6 years.
Figures 1 to 4 present income net of taxes, transfers and costs of child care in two
family types by number of hours worked per week. This shows the “budget constraints”
1
This is done using the Canadian Tax and Credit Simulator (CTaCS). A wide variety of government
programs is taken into account by the simulator (family allowances, tax credits, etc.) in addition to
federal and provincial taxes. This simulator is supplemented with a separate model of welfare transfers
built on Quebec’s welfare system in 2004.
3
Table 2: Definition of child care types
Type of care
Definition
Family-based ECC
Subsidized daycare
in private home.
Non-profit ECC
Subsidized daycare located in
a center not seeking to make profits.
For-profit ECC
Subsidized daycare located in
a center seeking to make profits.
Family-based private
Non-subsidized daycare located in
in private home.
Private non-profit center
Non-subsidized daycare located in a
center not seeking to make profits.
Private for-profit center
Non-subsidized daycare located in a
center seeking to make profits.
Child care provided by relatives Child care using the services of
relatives.
Table 3: Description of the costs of child care types
Type of care
Cost per day Cost per day
for the family for the gvt
Family-based ECC
7.0
25.96
Non-profit ECC
7.0
34.61
For-profit ECC
7.0
19.03
Family-based private
32.96
0.0
Private non-profit center
41.61
0.0
Private for-profit center
26.03
0.0
Child care provided by relatives 0.0
0.0
Total daily
Cost
32.96
41.61
26.03
32.96
41.61
26.03
0.0
These costs were derived from Lefevbre, Merrigan, et Verstraete (2009) and Lefevbre
et Merrigan (2008).
4
Figure 1: Impact of the provincial tax credit and of the federal deduction on income net of taxes, transfers and costs of child care for a single
mother using family-based private day care.
29000
27000
25000
23000
21000
without family
policy
With deduction
19000
With credit and
deduction
17000
15000
0
10
20
30
40
50
60
Figure 2: Budget constraints for a single mother by child care type
(ECC, private non-profit center and family-based private)
37000
32000
27000
ECC
22000
Private nonprofit
day care
Private family
day care
17000
12000
0
10
20
30
40
5
50
60
of those families and displays the income/work relationship generated by the tax accounting structure of the model. Figures 1 and 2 deal with single mothers, while Figures
3 and 4 focus on married women. Figure 1 presents the budget constraint of a single
mother with a preschooler using private family-based child care and earning an average
wage (14.37$/hour). One can see that measures to finance child care significantly increase the net income of the single mother and that this effect increases with the number
of hours worked. It also shows that the provincial tax credit seems to be slightly more
generous than the federal deduction.
Figure 2 presents the budget constraints for the same type of women, but with different child care modalities. It shows for example that it may be financially advantageous
to use family-based private child care rather than ECC for a single mother when she
earns an average wage and works less than 40 hours per week. ECC becomes more interesting than a private non-profit center when a single mother works more than 25 hours
per week — after which point the value of the subsidy paid directly to ECC exceeds the
value of the sum of the tax credits and deductions received from paying private child
care fees.
Figure 3 presents the budget constraints of a married mother of a preschooler that
uses family-based private child care services, with a hourly wage set to the average wage
(16.05$/hour) and a spouse earning an (average) salary of 18.68$/hour and working 40
hours per week. Unlike the graphs for the single mothers that are smoother, those for
married women are more broken: this is explained by the fact that such women have a
greater household income and that transfers are less important for them. Each bend in
the budget constraints represents a change in the personal income tax bracket. In the
first segment, the wife’s income is not taxed because it benefits from the basic tax credit;
in the second segment, the woman is taxed according to the first personal income tax
bracket, and in the third segment, according to the second personal income tax bracket.
Note that the value of the federal deduction increases with each bracket. Moreover, note
that the federal deduction has a monetary impact that is not too different from that
of the provincial tax credit in the case of a married mother, unlike the case of a single
mother.
Figure 4 presents the budget constraints of a married woman with the same characteristics but with different child care services. From 25 hours per week onwards, ECC
becomes increasingly more financially attractive than private child care services. The
net income advantage over family-based private child care amounts to $473 a year (at
25 hours/week) and to $1,423 for private profit center-based child care.
The greater the amount of income and leisure a woman is able to enjoy at a given
point on her budget constraint, the more likely it is that she will choose the corre6
Figure 3: Impact of the provincial tax credit and of the federal deduction on income net of taxes, transfers and child care costs of a woman
married to a man working full-time and using family-based private child
care services
72000
67000
62000
57000
Without family
policy
52000
With deduction
47000
With credit and
deduction
42000
37000
32000
0
10
20
30
40
7
50
60
Figure 4: Budget constraints of a woman married to a man working
full-time with child care of different types (ECC, private non-profit
center and family-based private).
77000
72000
67000
62000
ECC
57000
private nonprofit
day care
52000
Private family
day care
47000
42000
37000
32000
0
10
20
30
40
50
60
sponding level of labor supply. Since a lower level of leisure time is needed to increase
income, a trade-off between income and leisure must be made. This is implemented
out in the model’s behavioral structure through the estimation of a statistical model
(a conditional multinomial logit) that estimates the labor supply preferences (based on
observed and unobserved characteristics) of women in Quebec with children aged 0 to
4 years. The sample is representative of the Quebec population of such women. The
technical description of the model can be found in Appendix B.
3
Data
The main source of data used by the model comes from the 2004 Social Policy Simulation Database (SPSD) produced by Statistics Canada. The primary component of this
database is the Survey of Labour and Income Dynamics (SLID). For the purposes of this
paper, we also need to impute additional variables, such as gross hourly wages, the net
value of the residence, the value of financial assets and the net worth of vehicles owned.
The additional databases used by the model to impute these variables date mostly from
2004.
8
The selected sample excludes all women under age 18 and over 65 as well as full-time
students and disabled persons. Individuals reporting income from self-employment as
well as married women with no children of preschool age (between 0 and 4 years) are
also removed from the sample. Individuals working more than 70 hours per week are
omitted to avoid outliers. The work behavior of the spouses is not modeled: the labor
supply of men is supposed to be fixed.
4
Simulation
The model explains the labor supply behavior of women with children 0-4 years in the
presence of the current child care support system, which includes the provincial tax
credit, the federal tax deduction and the direct subsidies to ECC. The model can also
help anticipate the reactions of female labor supply to possible changes to that system.
Two alternative measures of supporting child care are considered in addition to the
federal measure introduced in July 2006 — the Universal Child Care Benefit. The first
alternative measure abolishes the direct ECC subsidies and provides a yearly allowance
of $5,200 to women for each child aged between 0 and 4 years. The second alternative
measure increases the price paid by families for ECC services from $7 to $10 a day.
These two measures have recently been proposed and debated in Quebec. Finally, the
universal child care benefit provides a monthly transfer of $100 per child under 6 years,
while not modifying other support measures. These measures are summarized in Table
1. The results of the simulation are shown in Appendix C.
References
Cogan, J. (1981): “Fixed Cost and Labour Supply,” Econometrica, 49, 945–964.
Gong, X. et A. van Soest (2002): “Family structure and female labour supply
in Mexico City,” Journal of Human Resources, 37, 163–191.
Gouriéroux, C. et A. Monfort (1996): Simulation-Based Econometric
Methods, Core Lectures, Oxford University Press.
Grenier, M. (2005): “Un enjeu oublié de la politique des services de garde à 5$:
les effets distributifs des subventions en nature,” Mémoire de maı̂trise, UQAM,
Montréal.
Gupta, A. et V. Kapur (2000): Microsimulation in Government Policy and
Forecasting, Amsterdam: North-Holland Elsevier Science.
9
Harding, A. (1996): Microsimulation and public policy, Amsterdam: NorthHolland Elsevier.
Japel, C., R. Tremblay, et S. Côté (2005): “La qualité des services à la petite
enfance: résultats de l’Étude longitudinale sur le Développement des Enfants du
Québec (ÉLDEQ),” Éducation et Francophonie, 23, 7–27.
Kamionka, T. (1998): “Simulated Maximum Likelihood Estimation in Transition
Models,” Econometrics Journal, 1, C129–C153.
Keane, M. et R. Moffitt (1998): “A Structural Model of Multiple Welfare
Program Participation and Labor Supply,” International Economic Review, 39,
553–589.
Laroque, G. et B. Salanié (1993): “Simulation-Based Estimation of Models
with Lagged Latent Variables,” Journal of Applied Econometrics, 8, S119–S133.
Lefevbre, P. et P. Merrigan (2008): “Child-Care Policy and the Labor Supply
of Mothers with Young Children: A Natural Experiment from Canada,” Journal
of Labor Economics, 26, 519–548.
Lefevbre, P., P. Merrigan, et M. Verstraete (2009): “Dynamic labour
supply effects of childcare subsidies: Evidence from a Canadian natural experiment on low-fee universal child care,” Labour Economics, 16, 490–502.
Ministère de la famille et de l’enfance (2002): “Cadre de référence de
l’évaluation de la qualité des services de garde,” Rapport technique, Gouvernement du Québec.
OECD (2004): “Indicators of Unemployment and Low-Wage Traps (Marginal Effective Tax Rates on Employment Incomes),” Document de travail 18, OECD
Social, Employment and Migration, Paris.
Soest, A. V. et M. Das (2001): “Family labor supply and proposed tax reforms
in the Netherlands,” De Economist, 149, 191–218.
A
Table of Child Care Tax Credit
Table 4 presents the parameters of the child care tax credit in Quebec.
10
11
Household income
($)
sup.
without
to exceeding
0
28 705
28 705
29 765
29 765
30 830
30 830
31 890
31 890
32 950
32 950
34 015
34 015
35 080
35 080
36 145
36 145
37 205
37 205
38 265
38 265
39 330
39 330
40 390
40 390
41 460
Rate of
tax
credit
%
75
74
73
72
71
70
69
68
67
66
65
64
63
Household income
($)
sup.
without
to exceeding
41 460
42 520
42 520
43 580
43 580
44 645
44 645
45 705
45 705
46 765
46 765
47 835
47 835
48 895
48 895
49 965
49 965
51 025
51 025
52 085
52 085
53 150
53 150
54 215
54 215
55 280
Rate of
tax
credit
%
62
61
60
59
58
57
56
55
54
53
52
51
50
Household income
($)
sup.
without
to exceeding
55 280
56 340
56 340
57 400
57 400
58 465
58 465
59 525
59 525
60 595
60 595
61 655
61 655
62 715
62 715
63 780
63 780
64 840
64 840
65 905
65 905
66 970
66 970
68 030
68 030
69 095
Rate of
tax
credit
%
49
48
47
46
45
44
43
42
41
40
39
38
37
Household income
($)
sup.
without
to exceeding
69 095
70 155
70 155
71 220
71 220
72 280
72 280
73 345
73 345
74 410
74 410
75 470
75 470
76 535
76 535
77 595
77 595
78 655
78 655
79 725
79 725 and more
Table 4: Parameters of Quebec’s child care tax credit, by yearly household income
Rate of
tax
credit
%
36
35
34
33
32
31
30
29
28
27
26
B
Econometric Model
In order to conduct appropriate policy simulations, the labor supply model must explain
individual behavior in a theoretically consistent manner. In particular, the Slutsky
restrictions must be satisfied. Unfortunately, the highly non-linear (and often nonconvex) budget sets make this task particularly demanding if we treat hours of work
as a continuous variable. To ease the task, it is now customary to follow Soest et Das
(2001) and focus on choices of a discrete number of weekly hours of work. Thus, let
the choice set facing an individual be {HT 1 , HT 2 ,. . . , HT p }, where p is the number of
possible choices of labor supply. Individuals are assumed to maximize a well-behaved
utility function defined over leisure, l, and net income, y, taking into account time and
income constraints:
max U i (li , y i )
s.t. y i ≤ y i (li , w)
and
li ≤ DT.
(1)
Hours of leisure, (li = DT − HT i ), are given by the time endowment, DT , from which
we subtract hours of work, HT i . We arbitrarily fix DT = 80 hours per week.2 Net
income equals earnings, wHT i , plus exogenous non-labor income, N , plus government
transfers, B, minus income taxes, T , and minus child care costs, CC i (Keane et Moffitt
1998):
y i (HT i ) = wHT i + N + B(wHT i , N, Xi ) − T (wHT i , N, Xi ) − CC i ,
(2)
where X is a vector of household variables.
We use a translog utility function because of its well-known properties and flexibility.
It is defined as:
U i (li , y i ) = β1 log(li ) + β2 log(li )2 + β3 log(y i ) + β4 log(y i )2 .
(3)
This specification of the utility function is locally flexible to the second order and does
not impose the quasi-concavity of preferences.3 As is customary, preference heterogeneity
is introduced in the leisure term:
β1 = α0 + α1 log(Age) + α2 log(Age)2 + α3 NB018 + α4 (P reschool > 0) + υ.
2
(4)
According to Gong et van Soest (2002), the parameter estimates are relatively insensitive to this
particular normalization.
3
The marginal utility of income must be positive for the model to be theoretically consistent — see
Soest et Das 2001.
12
The dummy variable (P reschool) is equal to one when a preschooler is present in the
household and the variable N B018 is the number of children between 0 and 18 years.
Preference for leisure may also vary with unobserved characteristics. A random component term υ is therefore added to equation (4). This term is assumed to be independently
and identically distributed as a normal random variate with mean zero and variance σ 2 .
To allow for optimization errors, we also assume that the utility function is random:
ui (li , y i ) = U i (li , y i ) + ξ i .
(5)
This assumption is made to account for the possibility that individuals may not know
their budget sets perfectly, or for the fact that their optimal choice may not correspond
to the discrete choices assumed in the model. For the purpose of identification, ξ i
is assumed to be independently and identically distributed as a Type-I extreme value
random variate (Gumble distribution).
According to equation (1), an individual will choose HT i if U i is greater than the
utility associated with the other alternatives. Given the stochastic specification of the
model, the probability that this will happen, conditional on a given modality for child
care, CCM , is given by:
exp (U i (li , y i ) |CCM i )
.
Pr U i ≥ U j ∀ j = Pp
j j
j
j
j=1 exp (U (l , y ) |CCM )
(6)
The discrete labor supply literature has generally found that such models tend to
underpredict the number of individuals with HT = 0. This will occur if the “fixed costs”
associated with work are omitted from the analysis. Indeed, Cogan (1981) long ago
insisted that both the monetary costs (commuting, daycare, etc.) and non-monetary cost
(psychic costs, stress, etc.) be accounted for explicitly in labor supply models. Obviously,
some of these costs are difficult to measure but may be proxied by demographic variables.
Fixed costs must then be subtracted from income if HT > 0. The problem with this is
that income minus fixed costs may be negative, a possibility that cannot be dealt with
due to the translog utility function. Gong et van Soest (2002) recently introduced the
notion of fixed income for not working. Instead of subtracting a fixed cost to work, a
fixed income can be added to the income at zeros hours of work, making inactivity a
relatively more attractive alternative. Both approaches have the potential of capturing
the bunching at zero hours of work. For practical reasons, the model for single mothers
is thus based upon the “fixed costs” approach, while the models for single females is
based upon the “fixed income” approach.
13
Fixed incomes and fixed costs are incorporated into the model by replacing U (y i , li )
by U (y 0 + F I, l0 ) and U (y i − F C, li ) ∀i > 0, respectively. More precisely,
F I = γ0 + γ1 ln (Age)
F C = δ0 + δ1 (P reschool > 0).
(7)
(8)
Equation (7) supposes that fixed income depends on age. It may be conjectured that
older individuals face a higher benefit to staying at home. In the model, this is akin to
having a larger fixed income at zero hours of work. Likewise, equation (8) states that the
fixed costs of work are associated with the presence of preschoolers. The two functions
could in principle be made to depend on a richer set of covariates. Various specifications
have indeed been estimated; to save on the degrees of freedom, the most parsimonious
specification that nevertheless fits the data well was retained.
One last modification is made to the standard model to accommodate the bunching
of weekly hours of work around 40. We write:
F C = δ0 + δ1 (P reschool > 0) + δ2 (HT = 40).
(9)
The parameter δ2 proxies a fixed effect that captures the utility/convenience possibly
associated with working the normal forty hours per week.
Finally, note that equation (6) is written conditionally on a given realization of the
child care mode, CCM . The unconditional probability is obtained by integrating (6)
over the probablity distribution of CCM :
Z
i
exp (U i (li , y i ) |CCM i )
2
j
Pp
f
CCM
;
µ,
σ
dCCM .
(10)
Pr U ≥ U ∀ j =
j j
j
j
j=1 exp (U (l , y ) |CCM )
Equation (10) does not in general have a closed-form solution. We thus simulate the
integration by drawing R = 50 draws from the distribution of CCM for each observation
and compute the average probability:
R
X
i
exp U i (li , y i ) |CCMqi
1
j
c U ≥U ∀j =
.
Pr
P
R q=1 pj=1 exp U j (lj , y j ) |CCMqj
(11)
The maximization of the
√ simulated likelihood function yields consistent and efficient
parameter estimates if N /R → 0 when R → +∞ and N → +∞ (see Gouriéroux et
Monfort 1996). The literature suggests that R = 20 appears adequate — see Laroque
et Salanié 1993, Kamionka 1998.
14
C
Tables of Results
Table 5: Effects of the withdrawal of current child care support measures on hours worked
by two subgroups of women with young children (% of hours worked Initially)
Prov. credit Fed. deduction $7/day fees without meas.
Percentage variations
intensive margin
Married women
-0.22
-0.17
-2.18
-2.70
Single mothers
-1.65
-0.87
-2.12
-15.88
Percentage variations
extensive margin
Married women
-0.79
-0.90
-1.91
-11.93
Single mothers
-1.17
-1.25
-3.25
-16.63
Total percentage
variations
Married women
-1.01
-1.07
-4.09
-14.63
Single mothers
-2.82
-2.12
-5.37
-32.51
15
Table 6: Effects of alternative child care
worked by two subgroups of women with
worked initially)
Family allowance
Percentage variations
intensive margin
Married women
-1.64
Single mothers
0.41
Percentage variations
extensive margin
Married women
1.43
Single mothers
12.70
Total percentage
variations
Married women
-0.21
Single mothers
13.11
support measures on hours
young children (% of hours
Univ. benefit
$10/day fees
-0.41
0.69
-0.08
-0.35
0.23
3.33
-0.73
-3.07
-0.18
4.02
-0.81
-3.42
Table 7: Effects of withdrawal of current child care support measures on hours of
work of two subgroups of women with preschool children
Married women Single mothers
Initial total hours worked yearly
101,017,000
13,824,000
∆ Tot. hours worked yearly after withdrawal
Provincial tax Credit
-1,017,000
-390,000
Federal tax deduction
-1,085,000
-293,000
ECC subsidies ($7-a-day fees)
-4,135,000
-560,000
All measures
-14,783,000
-4,495,000
Initial average hours worked yearly
933
1,280
∆ Av. hours worked yearly after withdrawal
Provincial tax credit
-9.4
-36.1
Federal tax deduction
-10.0
-27.1
Seats grant for $7 a day fees
-38.2
-68.8
All measures
-136.6
-416.1
16
Table 8: Effects of alternative child care support measures on hours of work of two
subgroups of women with preschool children
Married women Single mothers
Initial total hours worked yearly
101,017,000
13,824,000
∆ Total hours worked in the pop. after withdrawal
Family allowance
-21,938
1,813,000
Universal benefit
-186,508
555,000
$10-a-day fees for ECC
-820,434
-473,000
Initial average hours worked yearly
933
1,280
∆ Average hours worked after withdrawal
Family allowance
-1,9
213.8
Universal benefit
-1,7
51,4
$10-a-day fees for ECC
-7.6
-43.8
Table 9: Effects of withdrawal of current child care support measures on
income after taxes, transfers and child care expenses in two subgroups
of women with preschool children
Married women Single mothers
Initial total income
5,030,000,000
280,000,000
∆ Tot. Inc. After Withdra.
Provincial tax credit
-48,271,000
-4,986,000
Federal tax deduction
-45,850,000
-4,453,000
ECC subsidies ($7-a-day fees)
-160,400,000
-863,000
All measures
-490,300,000
-49,912,000
Initial average income
46,000
26,000
∆ Av. inc. after withdra.
Provincial tax credit
-446
-462
Federal tax deduction
-424
-412
ECC subsidies ($7-a-day fees)
-1,482
-106
All measures
-4,529
-4,621
∆ Av. inc. after withdra. (%)
Provincial tax credit
-1.1
-1.9
Federal tax deduction
-1.0
-1.3
ECC subsidies ($7-a-day fees)
-3.0
-1.1
All measures
-10.0
-17.0
17
Table 10: Effects of alternative child care support measures on income after taxes, transfers and child care expenses in two subgroups of women with
preschool children
Married women Single mothers
Initial total income
5,030,000,000
280,000,000
∆ total income
Family allowance
46,071,000
30,629,000
Universal benefit
99,029,000
6,829,000
$10 per day ECC fees
-40,318,000
-4,407,000
Initial average income
47 000
26,000
∆ average income
Family allowance
3,986
2,836
Universal benefit
915
632
$10 per day ECC fees
-372
-408
∆ percentage income
Family allowance
9,0
11.4
Universal benefit
2,1
2,6
$10 per day ECC fees
-0,8
-1.6
Table 11: Change in government expenditures (net of effects on taxes and transfers) of
withdrawal of child care support measures for married women
Variables
Federal tax
Provincial tax
Federal transfers
Provincial transfers
Social assistance
Retirement pen. cont.
Employment insurance
ECC subsidies
Net provincial cost
Per capita prov. cost
Net federal cost
Per capita fed. cost
Total cost
Per capita total cost
∆ after tax
cred. withdrawal
-787,000
-1,752,000
977,000
-44,801,000
610 000
-581,605
-278,000
0
-41,857,000
-387
2,041,000
19
-39,815,000
-368
∆ after tax
ded. withdrawal
25,328,000
-2,068,000
-11,544,000
-600,000
525 000
-666,000
-314,000
-5,101,000
-2,450,000
-23
-36,558,000
-338
-39,009,000
-360
18
∆ after ECC
grant withdrawal
-48,622,000
-6,809,000
29,053,000
201 400 000
95,000
-3,205,000
-1,396,000
-524,800,000
-313,300,000
-2,894
79,071,000
730
-234,300,000
-2,164
∆ withdrawal
of all measures
1,445,000
-30,922,000
87,70,000
-38,002,000
6,037,000
-9,339,000
-4,426,000
-524,800,000
-516,500,000
-4,772
11,750,000
109
-504,800,000
-4,663
Table 12: Change in government expenditures (net of effects on taxes and transfers) of
withdrawal of child care support measures for single mothers
Variables
Federal tax
Provincial tax
Federal transfers
Provincial transfers
Social assistance
Retirement pen. cont.
Employment insurance
ECC subsidies
Net prov. cost
Per capita prov. cost
Net federal cost
Per capita fed. cost
Total cost
Per capita total cost
∆ after tax
cred. withdrawal
-43,000
-177,000
23,000
-3,924,000
1,374,000
-207,000
-92,000
0
-2,166,000
-201
158,000
15
-2,008,000
-186
∆ after tax
ded. withdrawal
3,155,000
-127,000
140,000
190,000
992,000
-190,000
-84,000
-2,409,000
-910,000
-84
-2,931,000
-271
-3,841,000
-355
∆ after ECC
grant withdrawal
-1,837,000
-417,000
1,155,000
27,256,000
2,121,000
-314,000
-47 000
-52,869,000
-22,760,000
-2,795
3,134,000
385
-19,626,000
2,410
∆ withdrawal
of all measures
225,000
-2,881,000
2,231,000
664,000
16,930,000
-2,554,000
-1,147,000
-52,869,000
-29,841,000
-2,763
3,152,000
291
-26,689,000
-2,471
Table 13: Change in government expenditures (net of effects on taxes and transfers)
of alternative child care support measures for married women
Variables
∆ family allowance ∆ univ. benefit ∆ $10 per day fees
Federal tax
4,622,000
18,587,000
-7,016,000
Provincial tax
11,773,000
22,497,000
-1,717,000
Federal transfers
-3,813,000
-12,491,000
3,809,000
Provincial transfers
12,206,000
-6,318,000
363,000
Social-assistance
-1,415,000
-5,514,000
344,000
Retirement pen. cont.
-35,000
-279,000
-512,000
Employment Insurance
-6,000
-98,000
-244,000
Subsidies
79,306,000
714,000
-58,592,000
Universal Benefit
169,400,000
Net Provincial Cost
78,358,000
-33,336,000
-55,656,000
Per Capita Prov. Cost
6,780
-308
-514
Net Federal Cost
-8,429,000
138,381,000
11,069,000
Per Capita Fed. Cost
-729
1,278
102
Total Cost
69,929,000
105,045,000
-44,586,000
Per Capita Total Cost
6,051
970
-412
19
Table 14: Change in government expenditures (net of effects on taxes and transfers)
of alternative child care support measures for single mothers
Variables
∆ family allowance ∆ univ. benefit ∆ $10 per day fees
Federal tax
77,000
1,281,000
-616,000
Provincial tax
6,774,000
1,441,000
-79,000
Federal transfers
-586,000
-931,000
386,000
Provincial transfers
36,824,000
-1,047,000
-292,000
Social-assistance
-24,670,000
-7,400,000
2,193,000
Retirement pen. cont.
747,000
249,000
-219,000
Employment insurance
377,000
118,000
-105,000
Subsidies
8,808,575
1,070,000
-7,441,000
Universal benefit
14,233,000
Net provincial cost
13,441,000
-9,068,000
-5,242,000
Per capita prov. cost
1,244
-840
-485
Net federal cost
-1,040,000
11,902,000
1,108,000
Per capita fed. cost
-96
1,102
103
Total cost
12,401,000
2,834,000
-4,134,000
Per capita total cost
1,148
262
-383
20