The Australian National University Working Papers in Economics and Econometrics

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Historically, in virtually all developed economies there seems to be clear evidence of an inverse relationship between female labor supply and fertility. However, particularly in the last decade or so, the rela-tionship across countries has been positive: for example countries like Germany, Italy and Spain with the lowest fertility rates also have the lowest female participation rates. We accept the hypothesis that the reason for this lies in the combined effects of a country’s tax system and system of child support, and we have sought to clarify this theoret-ically, using an extended version of the Galor-Weil model. The results suggest that countries with individual rather than joint taxation, and which support families through improved availibility of alternatives to domestic child care, rather than through direct child payments, are likely to have both higher female labor supply and higher fertility. These results are strengthened when we take account of the hetero-geneity among households that undoubtedly exists. JEL Classification: H31, H53, J13, J22 Acknowledgements: The work for this paper was funded by an Australian Research Council grant.

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تاریخ انتشار 2001