Maternal Child Care: Some Macroeconomic Implications in the Time of COVID-19

Abstract

In this paper, I make an attempt to understand the efficacy of some of the current fiscal stimuli being implemented to deal with the ongoing economic disaster precipitated by COVID-19. The focus is on pecuniary externalities working through the demand side, for they seem crucial for recovery. I use a well-known model of the Big Push of the economic development literature for this purpose because it lays bare the essential multiplier process involved. This enables an examination of the role that traditional maternal child care plays in the efficacy of the fiscal policies intended to support the economy and to facilitate recovery. This works through the maternal contribution to human capital during the childhood of the current labor force. Based on the reasoning developed here in the context of COVID-19, I argue for universal and subsidized child care under normal times in view of its long-term macroeconomic consequences. This argument is independent of whether the subsidy elicits greater maternal labor supply.