Abstract
This study analyzes how the expansion of formal child care services affects the fertility rate and economic growth through the regional migration of the households, using a two-region overlapping generations model. We consider formal child care services that cover some of the childrearing time of parents. The results show that an expansion of child care services increases the fertility rate of households. Moreover, such an expansion influences the regional migration choice of households and decreases the population ratio of the urban area through a change in the labor supply of each household as well as in the wage rate. Further, the savings of each household decrease because of the increase in the tax burden engendered by the expansion of child care. Therefore, savings in the economy decrease. As a result, capital accumulation decreases through the expansion of child care services.
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