We analyse a model in which families may either be “traditional” single-earner with caring for the child at home or “modern” double-earner households using market child care. Family policies may favour either the one or the other group, like market care subsidies vs. cash for care....

We model choices between caring for an infant at home or through some market provision of child care. Maternal labor supply necessitates child care purchased in the market. Households are distinguished along three dimensions: (i) Exogenous income, (ii) the wage rate of the primary care giver and...