Family Aspects, Economic Consequences and Childcare-giving Decision: a Theoretical Framework and Empirical Evidence from China

The mechanisms of childcare-giving decisions and economic consequences have been an unsolved issue for decades. Economic factors are considered as determining factors in studies focusing on childcare-giving decisions, while childcare-giving methods are treaded exogenously in discussions of economic consequences, which makes the mechanisms incompatible. This article corroborates a partial equilibrium model from the perspective of household utility to forge decision-making and economic mechanisms into a common framework. By employing China Family Panel Studies (CFPS for short) dataset covering 8,875 households of 29 provinces from 2012–2018, regressions of a M-logit model and a PSM model empirically identify the mechanism of childcare-giving decision. The findings suggest the marginal conditions of childcare-giving decision, together with employment participation, family income and consumption, are determined by parameters of childcare demands, childcare abilities and wages. Economic and demographic policies sociating with those parameters may effectively raise household preference of social childcare services and boost labor supply and consumption.