Publication Type
Journal Article
Version
submittedVersion
Publication Date
3-2019
Abstract
The possibility of engaging in household child care may exacerbate the incentives of parents and grandparents to falsely claim disability benefits as households also get to save on formal child care costs. This paper considers a multi-generational family model with persistence in privately observed shocks and presents an efficient implementation case for subsidizing formal child care costs of the disabled. An implementation of the optimal scheme that consists of capped formal day care subsidies, non-linear income taxation and asset-testing is proposed. Simulations based on a parametrization that targets key features of the US labor and child care markets suggest that day care subsidies may lead to sizeable cost savings.
Keywords
disability insurance; day care subsidies; multi-member family
Discipline
Income Distribution | Insurance
Research Areas
Applied Microeconomics
Publication
The B.E. Journal of Economic Analysis & Policy
First Page
1
Last Page
49
Publisher
De Gruyter
Citation
HO, Christine.
Optimal social insurance with informal child care. (2019). The B.E. Journal of Economic Analysis & Policy. 1-49.
Available at: https://ink.library.smu.edu.sg/soe_research/2067
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1515/bejeap-2018-0082