Suppose childcare centres charge working parents per hour that their children spend at the centres (zero childcare fixed costs).

The government passes a subsidy, so per hour cost per child borne by parents is reduced by half.

Would this policy increase the labour supply of parents with young children?

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Originally Posted by jgb99

Suppose childcare centres charge working parents per hour that their children spend at the centres (zero childcare fixed costs).

The government passes a subsidy, so per hour cost per child borne by parents is reduced by half.

Would this policy increase the labour supply of parents with young children?

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Theoretically reducing a barrier to entry into the labour force should increase the available labour force. This sort of scattergun policy does not address the main barrier to entry which is skill or the matching of available skills to demand