Study on the Model Selection and Optimal Design of Child Care Subsidy

Although a large number of the existing literature have proved the importance of government implementation of childcare subsidies, few scholars have studied the implementation methods and how to implement childcare subsidies. In this paper, an optimal subsidy model based on the household unit is constructed, the modes of direct subsidy and indirect subsidy selection are discussed, and the applicable scope and selection threshold of different subsidy types are proved. According to the CFPS database of China, the optimal subsidy amount of the government for households with different productivity types is calculated by simulating the amount of childcare subsidies for households with different productivity types in different markets. The results show that direct subsidies should be given to households whose wage rate is lower than the market price of childcare. Indirect subsidies should be provided to households whose wage rates are higher than the market price for childcare. Finally, this paper deduces the optimal childcare subsidy curve and designs the macro optimal subsidy curve which can be easily identified for the reference of the actual government subsidy