Child-care subsidies to working single parents

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Reference no: EM131094663

Assume that a state government currently provides no child-care subsidies to working single parents, but that it now wants to adopt a plan that will encourage labor force participation among single parents. Suppose that child-care costs arc hourly, and suppose the government adopts a child-care subsidy that pays $3 per hour for each hour the parent works, up to 8 hours per day. Draw a current budget constraint (net of child-care costs), for an assumed single mother and then draw in the new constraint. Discuss the likely effects on labor force participation and hours of work.

Reference no: EM131094663

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