Child Care Support Policy and Fertility in a Model Based on the Supply of Child Care Services∗

This paper shows how fertility is determined in a model that assumes the existence of child care services. When child care services exist, two stable multiple equilibria result: One is a stable, steady state that brings about low fertility with low labor participation; the other, a stable state that brings about high fertility with high labor participation. Moreover, this paper also analyzes the effects of child care policy, for example, the child allowance and expansion of child care services policies. These policies instantaneously pull up fertility. However, the high fertility equilibrium vanishes in the case of large-scale child care policy. Therefore, there is only a low fertility equilibrium. As a result, these child care policies cause fertility to decrease steeply in the long run, even though they are valid in the short run.