DP4357 Part-Time Employment Traps and Childcare Policy

Author(s): Alison L Booth, Melvyn G Coles
Publication Date: April 2004
Keyword(s): childcare, education, full-time, market failure, part-time
JEL(s): H24, J13, J24, J31, J42
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4357

We model educational investment, wages and employment status (full-time, part-time or non-participation) in a frictional world in which heterogeneous workers have different productivities, both at home and in the workplace. We investigate the degree to which there might be under-employment and distortions in human capital investment, and we then show how childcare policy can be used not only to correct the ex post under-participation problem but also to provide efficient incentives to invest optimally ex ante in education.