This paper develops a structural model which links parental time use to a child's development in a household with two parents and one child. Since the allocation of home time and market work has become more equally distributed within households during the latest decades and since fathers seem to be an increasingly important part of their children's daily life, this study, opposite of most other studies within the childcare literature, explicitly takes both parents' time spent on childcare into account as well as childcare bought in the market. The parents' optimal labor supply decisions are linked to the child's development, and it is shown that the quality of market provided childcare vs. the quality of parental childcare is crucial for the parents' decisions. The availability of paternal childcare does not seem to affect the mother's labor supply decision, though. Several different policy scenarios are investigated within the model context and, finally, the model's assumptions about childcare quality and substitution between parental childcare and market provided childcare are tested against Danish time use data.
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Annual Conference of the European Association of Labour Economists (EALE), 2006