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Estimating net child care price elasticities

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Xiaodong Gong was with the Australian Treasury when the main part of this work was undertaken. He is now with the National Centre for Social and Economic Modelling at the University of Canberra. Robert Breunig is with the Research School of Economics at the Australian National University and is a consultant at the Australian Treasury. The views expressed in this paper are those of the authors and do not necessarily reflect those of the Australian Treasury. We are grateful to Anthony King, Gordon Leslie and Rob Heferen for comments on an earlier draft of the paper. Guyonne Kalb and Stephan Whelan commented on a related paper and their insights are also reflected in this paper. We have further benefited from the comments of participants at three conferences where we presented this work in July 2011: the Econometric Society Australasia Meetings in Adelaide; the Australian Conference of Economists in Canberra, and the HILDA Survey '10th Anniversary' Research Conference in Melbourne. Any omissions and mistakes are the sole responsibility of the authors.

This paper uses unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The HILDA Project was initiated and is funded by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and is managed by the Melbourne Institute of Applied Economic and Social Research (Melbourne Institute). The findings and views reported in this paper, however, are those of the author and should not be attributed to either FaHCSIA or the Melbourne Institute.