MAXIMISING GAINS FROM TRADE
Begin with the truth that Swedish dad and mom at the moment obtain in depth paid depart upon the start of a kid, and so it may be mentioned they’re already paid to take care of their kids. Whether or not or not you agree with that coverage, it’s longstanding and well-established. Take it as a given.
Now think about that you’re an bold Swedish physician or lawyer, climbing the profession ladder, and are self-aware sufficient to grasp you don’t at all times have fully the proper diploma of pure endurance vital for parenting. In that case, you may choose to return to work following the start of your little one. Beneath the established order ex ante, you can not work and draw your regular wage and nonetheless get the total childcare profit, regardless that some little one advantages are paid mechanically.
There’s thus a possible inefficiency within the system. You might keep at dwelling simply to get the cash, even when an alternate association could be higher for everybody.
Now add grandparents to this equation. If the grandparents could be paid to maintain your little one, swiftly the prolonged household as an entire doesn’t lose the cash by having the guardian return to work. As an alternative, that cash is transferred to the grandparents, so the work disincentive is diminished.
And economists will let you know that the dad and mom and grandparents can do their very own settling up. If the grandparents are well-to-do, as an example, and desirous to spend time with their grandkids, they could funnel a few of that cash again to the dad and mom or the kid, both straight or not directly. In some circumstances, on web, the grandparents could not find yourself getting paid something in any respect.
In essence, you possibly can consider this coverage as a mannequin designed to maximise features from commerce.