Purchased child care, optimal family size and mother's employment: theory and econometric analysis.

This paper develops a model of family size decisions in which couples choose explicitly a combination of mother's time and purchased childcare (childminder, nanies) for the care and rearing of children. The theoretical model implies that the impact of the mother's wage on her complete fertility varies with the market price of childcare, and that this effect increases (becoming less negative or more positive) with the level of her wage. Econometric analysis of British micro-data confirms the main predictions of the model.