The paper characterizes the optimal tax policy and the optimal quality of day care services in a OLG model with warm-glow altruism where parental choices over child care arrangements affect the probability that the child becomes a high-skilled adult in a type-specific way. With respect to...

In this paper we develop an overlapping generations model in which child care matters for human capital accumulation. We investigate whether an increase in labor supply brought about by a reduction in taxes is always associated with a reduction in parental time devoted to children, which...