Does an urban childcare policy improve the nurturing environment in a city?

Abstract

Previous theoretical studies on economic development and demographics have discussed the impacts of childcare policies but have not specifically addressed the relationships between population concentration in urban areas and fertility rates. While many studies focus on population size and density in regions and countries to understand regional economies, few studies explore the effects of childcare policies on demographics. Therefore, we investigated the effects of regional childcare policies on population migration and regional and total fertility rates. Our study presents a two-region overlapping generations model with the following findings: (1) increasing the tax rate to enhance urban childcare facilities leads to a short-term increase in the urban population proportion and restructures the economy to support urban area population concentration. (2) With a constant tax rate, the dispersion economy declines in total fertility as it develops, while the agglomeration economy sees an increase in total fertility during development. This model can clearly highlight the effects of policies aimed at addressing the shortage of childcare facilities in urban areas.