Abstract
Using an overlapping generations model, we present an analysis of the effects of wage-tax-financed subsidies for purchases of market child care on fertility and the gender wage gap. A change in the tax rate propels the economy from a point converging to a steady state to a point on the path to a new steady state. Immediately after a tax-subsidy increase, the fertility rate is expected to be higher: the gender wage gap might decrease. These results do not seem to be inconsistent with the experiences of high-income, economically developed countries during 2000─
2010 when these countries undertook major policy changes.
