I am in the process of writing a report on child care arrangements in Australia. Essentially the economic arguments will be along the lines of the following paragraphs. The argument starts from the macro and works back. I need some help in finding out if anyone else has put arguments along these lines. Marx made some brief remarks that can be interpreted along these lines but I would be very interested to learn if there is anything more recent.
>From a purely economic perspective, the provision of formal child care is more efficient compared with parents doing it themselves. One person can stay home and look after their own children or someone can be employed to look after the children of many parents. It is assumed that one care worker can look after the children of 6 parents. If all work is valued equally and generates the same value added per hour worked then one additional employed care worker frees 6 parents who want to work, then the national product of Australia will increase by the value added of 5 workers.[1] The ratio of carers to children is subject to legislated minima which vary for different age groups. Babies require the highest ratio while after school hours care is much lower. Complicating the efficiency argument just discussed is the fact that people receive less than the amounts in the example. To begin with, as the example suggests, workers receive a wage which is less than the value added they produce (whether or not measured in average or marginal terms). Indirect taxes such as the GST also need to be added to the value of their output. Moreover workers' take home pay is much less than the wage paid by the employer because of income taxes, super contributions, payroll taxation, workers compensation insurance and other such. In the example above if there is one carer for every 6 parents, the wage is total value added and there are no other taxes, charges or other complications, then each parent will be paying 1/6th of a wage for child care. If now we take account of income tax at an average of say 25 per cent of income, then each parent will now be paying 2/9th of a wage. The costs have increased from 16.7% to 22.2% of a wage. There are further things that drive a wedge between what a parent pays for child care and what the child care workers receive. There is also a profit for the owner of the facility, the GST, payroll tax, superannuation, workers compensation insurance, general insurance to name a few. All of these complications mean that the ratio of one care worker to every 6 parents is not reflected in the private costs of child care. This then is one of the main arguments for public provision and/or subsidies for child care. Indeed, without public support the private costs of care for one child would appear to be approaching the after-tax and after work related expenses for a woman on average weekly full-time earnings-well up from the 1/6th assumed in the arguments so far. I hope this gives a flavour of my thinking and hopefully triggers some memory of similar and better arguments. Incidentally I certainly don't mean to disparage parents who chose to stay at home and provide care themselves. But the arguments should be taken to apply where parents decide to seek child care, or would if there were choices available to them. David Richardson [email protected] _____ [1] If the product of parents at home is valued by the wage they could have earned elsewhere then there would be no apparent increase in national product. The problem here is that outputs are valued by the cost of inputs.
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