The Mismatch between Employment and Child Care in Italy: the Impact of Rationing

In Italy the participation of women has not increased very much in the last few decades relative to other developed countries and it is still among the lowest in Europe. The female employment rate stands almost 13 percentage points below the EU average and 22 below the Lisbon target. One of the most important reasons is related to the characteristics of child care system. In this paper we analyze the characteristics of the child care system in Italy and its relationship to the labor market participation decision of mothers. We present a simple discrete choice framework in which the two decisions can be jointly considered, which also allows for simple forms of rationing. We go on to estimate a bivariate probit model of the child care and employment decisions and interpret the results within the framework of our model. We find evidence that rationing is an important factor in interpreting price effects on utilization rates and employment decisions.Labor Market Decisions, Fertility, Child care.

Labor Supply and Child Care Costs: The Effect of Rationing

labor market decisions, fertility, child care

Endogeneous Household Interaction

Most econometric models of intrahousehold behavior assume that household decisionmaking is efficient, i.e., utility realizations lie on the Pareto frontier. In this paper we investigate this claim by adding a number of participation constraints to the household allocation problem. Short-run constraints ensure that each spouse obtains a utility level at least equal to what they would realize under (inefficient) Nash equilibrium. Long-run constraints ensure that each spouse obtains a utility level equal to a least what they would realize by cheating on the efficient allocation and receiving Nash equilibrium payoffs in all successive periods. Given household characteristics and the (common) discount factor of the spouses, not all households may be able to attain payoffs on the Pareto frontier. We estimate these models using a Method of Simulated Moments estimator and data from one wave of the Panel Study of Income Dynamics. We find that the model with long-run participation constraint fits the data best, and that 6 percent of sample households are not able to attain efficient outcomes. To meet the long-run participation constraint, over 90 percent of "efficient" households are required to modify the ex ante Pareto weight of 0.5 for each spouse assumed to apply to all households.Household Time Allocation, Grim Trigger Strategy, Household Production, Method of Simulated Moments

Endogeneous Household Interaction

Most econometric models of intrahousehold behavior assume that household decision-making is efficient, i.e., utility realizations lie on the Pareto frontier. In this paper we investigate this claim by adding a number of participation constraints to the household allocation problem. Short-run constraints ensure that each spouse obtains a utility level at least equal to what they would realize under (inefficient) Nash equilibrium. Long-run constraints ensure that each spouse obtains a utility level equal to a least what they would realize by cheating on the efficient allocation and receiving Nash equilibrium payoffs in all successive periods. Given household characteristics and the (common) discount factor of the spouses, not all households may be able to attain payoffs on the Pareto frontier. We estimate these models using a Method of Simulated Moments estimator and data from one wave of the Panel Study of Income Dynamics. We find that the model with long-run participation constraint fits the data best, and that 6 percent of sample households are not able to attain efficient outcomes. To meet the long-run participation constraint, over 90 percent of "efficient" households are required to modify the ex ante Pareto weight of 0.5 for each spouse assumed to apply to all households.household time allocation, grim trigger strategy, household production, method of simulated moments

Visitations and Transfers in Non Intact Households

Recent research reveals a negative impact of divorce on children's welfare as a consequence of the reduction in monetary and time contributions by the non-custodian parent. When the custody arrangement is sole custody, the variables that link the absent parent to the child are visitations and child support transfers. We explain visitations and child support transfers using a behavioral model of competitive equilibrium in which both variables are the results of competitive allocations realized in a decentralized non-cooperative manner. In our framework the mother has control over visitations and the father has control over child support. Estimates of the model are used to simulate the effects of alternative endowment levels on the proportion of time spent with the noncustodial parent and the ex-post parental income distribution. Our results show that a more equal allocation of time with the child, though beneficial to the children, may have a negative effect for the mother's welfare, increasing the income gap between ex-spouses. Kay Words: Divorce, Visitations, Child support transfers.Divorce, Visitations, Child support transfers

Why are fertility and participation rates so low in Italy (and Southern Europe)?

Over the last decades labour market participation of women increased, while fertility declined in most advanced countries. This pattern is consistent with microeconomic predictions: economic models of fertility behaviour predict in fact that an increase in women’s schooling levels and wage rates leads to an increase in their labour supply and to a reduction in fertility

Modes of Spousal Interaction and the Labor Market Environment

We formulate a model of household behavior in which cooperation is costly and in which these costs vary across households. Some households rationally decide to behave noncooperatively, which in our context is an efficient outcome. An intriguing feature of the model is that, while the welfare of the spouses is continuous in the state variables, labor supply decisions are not. Small changes in state variables may result in large changes in labor supplies when the household switches its mode of behavior. We estimate the model using a nationally representative sample of Italian households and find that the costly cooperation model signfificantly outperforms a noncooperative model. This suggests the possibility of attaining large gains in aggregate labor supply by adopting policies which promote cooperative household behavior.Household Time Allocation, Nash Bargaining, Nash Equilibrium; Maximum Likelihood.

Home-leaving Decision of Daughters and Sons

In spite of relevant differences between countries, a common international pattern emerges: daughters leave parental homes earlier than sons. Drawing upon the European Community Household Panel, we explore the impacts of various factors that affect daughters' and sons' home-leaving decisions. Results show that the decisions of daughters appear to be more responsive to environmental factors than sons'. This implies that policies aiming to speed up the transition to adulthood might have important economic impact on the existing gender differences in family formation and household responsibilities and income inequality across young men and women.Living Arrangements; Gender; Social Policies

Household Time Allocation and Models of Behavior: A Theory of Sorts

We make the point that a flexible specification of spousal preferences and household production technology precludes the possibility of using revealed preference data on household time allocations to determine the manner in which spouses interact. Under strong, but standard, assumptions regarding marriage market equilibria, marital sorting patterns can be used essentially as "out of sample" information that allows us to assess whether household behavior is cooperative. We use a sample of households drawn from a recent wave of the Panel Study of Income Dynamics, and find some evidence supporting the view that households behave in a cooperative manner.Bilateral Matching, Household Time Allocation, Nash Bargaining