DP12550 Childcare and Commitment within Households

Author(s): Paula Gobbi
Publication Date: December 2017
Keyword(s): childcare, education, Semi-Cooperative Model, structural estimation, time use
JEL(s): J11, J13, J16, O11
Programme Areas: Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=12550

This paper proposes a semi-cooperative marital decision process to explain parental underinvestment in childcare. First, parents collectively choose the amount of labor to supply and, in a second step, they each choose the amount of childcare as the outcome of a Cournot game. Non-cooperative behavior stems from the lack of a credible commitment between spouses regarding the amount of childcare they each supply. The theoretical model is able to reproduce that parental time with children increases both with an individual's education and with that of his/her partner. The limited commitment problem leads to an underinvestment in childcare and, hence, child quality: compared to the efficient provision of childcare, the semi-cooperative framework leads to an amount of child quality that is 45% lower.