Child care costs, household liquidity constraints, and gender inequality

Abstract In a model with endogenous female labour supply and wages, we show that liquidity constraints prevent households from buying child care generate an inefficiency amplify gender gaps in the market. We evaluate relative merits of paid maternity leave, subsidies, government loans mitigating promoting equality. While extension duration leave has ambiguous effects, subsidies form vouchers remove reduce participation wages. illustrate mechanisms at play numerical example using Spanish data.