ABSTRACT
In this chapter, the authors discuss labour supply and child care modelling in a microsimulation context, and report the results from this type of behavioural microsimulation with regard to female labour supply effects, distributional effects, and the costs to the government. Our interest is in changing transfer schemes to improve parents' labour supply. The authors present two behavioural microsimulation models, developed in Australia and Norway respectively, to analyse policy changes. The Norwegian model is based on a structural joint labour supply and child care choice model, whereas the Australian model is based on a two-step labour supply and child care choice model, in which a reduced-form bivariate tobit model for formal and informal care is used to impute care costs into a structural labour supply model. The authors review the literature on labour supply and child care modelling. The simultaneous choice of child care arid labour supply is a multidimensional issue, which creates a number of empirical challenges.
