Does Public Spending on the Family in Sweden Compensate the Higher Opportunity Costs of Children for Highly Educated Women?

Daniel Hallberg, Uppsala University
Thomas Lindh, Institute for Futures Studies

In Sweden the previously negative correlation between female labor force participation and fertility has shifted to a clearly positive correlation and a tendency that highly educated women have as many or more children as the low educated. But this tendency also means that the average age of the mother at first birth has been rising sharply and now is almost 30 years. We propose that the Swedish system of public intergenerational transfers compensate the higher opportunity costs of children for high educated women. We use a longitudinal microdata sample of 3 percent of the Swedish population to compare tax rates and child cost estimates for parents with different educational levels. Results so far indicate that high educated women receive a proportionally smaller decrease in tax rates as they have a new child than the low educated.