This paper introduces a static structural model of hours of market
labor supply, time spent on child care and other domestic work, and
bought in child care for married or cohabiting mothers with pre-school
age children. The father's behavior is taken as given. The main goal is
to analyze the sensitivity of hours of market work, parental child care,
other household production and formal child care to the wage rate, the
price of child care, taxes, benefits and child care subsidies. To account
for the non-convex nature of the budget sets and, possibly, the household
technology, a discrete choice model is used. The model is estimated using
the HILDA dataset, a rich household survey of the Australian population,
which contains detailed information on time use, child care demands and
the corresponding prices. Simulations based on the estimates show that
the time allocations of women with pre-school children are highly sensitive to changes in wages and the costs of child care. A policy simulation
suggests that labor force participation and hours of paid work would increase substantially in a scal system based solely on individual rather
than joint taxation.