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Child Care Subsidy Programs

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Author Info
David M. Blau

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Abstract

Child care and early education subsidies are an important part of government efforts to increase economic independence and improve development of children in low-income families in the United States. This chapter describes the main subsidy programs in the U.S., discusses economic issues that arise in designing such programs and evaluating their effects, and surveys evidence on the effects of the programs. An important theme of the chapter is the tradeoff between the policy goals of increasing economic independence and improving child outcomes. All child care and early education subsidies affect both work incentives and inputs to child development. But a subsidy designed specifically to achieve one of these policy goals will usually be relatively ineffective at accomplishing the other goal. The evidence indicates that child care subsidies that reduce the effective price to parents of all purchased child care, regardless of the type and location of care, cause the employment rate of mothers of young children to increase. The most reliable evidence suggests that the effect is fairly small, but the range of estimates in the literature is quite large. The three main difficulties encountered in research on this issue are finding appropriate control groups, accounting for the wide prevalence of unpaid child care arrangements, and identification of the effect of the price of child care. Evidence on the employment effects of subsidies restricted to high-quality child care arrangements is non-existent. There is very little evidence of the effect of child care subsidies on child development outcomes.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7806.

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Date of creation: Jul 2000
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Handle: RePEc:nbr:nberwo:7806

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J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  17. Hotz, V.J. & Kilburn, M.R., 1995. "Regulating Child Care: The Effetcs of State Regulation on Child Care Demand and its Cost," Papers 95-03, RAND - Labor and Population Program.
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    Other versions:
  24. Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, vol. 67(6), pages 1255-1294, November.
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  28. Mroz, Thomas A, 1987. "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," Econometrica, Econometric Society, vol. 55(4), pages 765-99, July. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Tekin, Erdal, 2002. "Child Care Subsidies, Wages, and Employment of Single Mothers," IZA Discussion Papers 517, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. David Blau & Erdal Tekin, 2003. "The Determinants and Consequences of Child Care Subsidies for Single Mothers," NBER Working Papers 9665, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Mike Brewer, 2000. "Comparing in-work benefits and financial work incentives for low-income families in the US and the UK," IFS Working Papers W00/16, Institute for Fiscal Studies. [Downloadable!]
  4. Pierre Lefebvre & Philip Merrigan, 2005. "Low-fee ($5/day/child) Regulated Childcare Policy and the Labor Supply of Mothers with Young Children: A Natural Experiment from Canada / La politique des services de garde à 5 $/jour et l’offre de," CIRANO Working Papers 2005s-08, CIRANO. [Downloadable!]
  5. Michaela Kreyenfeld & C. Katharina Spieß & Gert G. Wagner, 2000. "A Forgotten Issue: Distributional Effects of Day Care Subsidies in Germany," Discussion Papers of DIW Berlin 226, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  6. Pierre Lefebvre & Philip Merrigan, 2005. "The Québec’s Experiment of $5 per Day per Child Childcare Policy and Mother’s Labour Supply: Evidence Based on the Five Cycles of the NLSCY," CIRANO Project Reports 2005rp-21, CIRANO. [Downloadable!]
  7. Erdal Tekin, 2004. "Child Care Subsidy Receipt, Employment, and Child Care Choices of Single Mothers," NBER Working Papers 10459, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Erdal Tekin, 2004. "Single Mothers Working at Night: Standard Work, Child Care Subsidies, and Implications for Welfare Reform," NBER Working Papers 10274, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Michael Baker, 2006. "Universal Childcare, Maternal Labor Supply, and Family Well-Being," Working Papers id:547, esocialsciences.com. [Downloadable!]
    Other versions:
  10. Rachel Connelly & Jean Kimmel, 2001. "The Effect of Child Care Costs on the Labor Force Participation and Welfare Recipiency of Single Mothers: Implications for Welfare Reform," Staff Working Papers 01-69, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  11. Pierre Lefebvre & Philip Merrigan & Matthieu Verstraete, 2006. "Impact of Early Childhood Care and Education on Children's Preschool Cognitive Development: Canadian Results from a Large Quasi-experiment," Cahiers de recherche 0636, CIRPEE. [Downloadable!]
  12. Anna Aizzer, 2001. "Home Alone: Maternal Employment, Child Care and Adolescent Behavior," UCLA Economics Working Papers 807, UCLA Department of Economics. [Downloadable!]
  13. Brink, Anna & Nordblom, Katarina, 2005. "Child-care quality and fee structure: Effects on labor supply and leisure composition," Working Papers in Economics 157, Göteborg University, Department of Economics. [Downloadable!]
  14. Bruce D. Meyer & James Xavier Sullivan, 2000. "The Effects of Welfare Reform: The Living Conditions of Single Mothers in the 1980s and 1990s," JCPR Working Papers 206, Northwestern University/University of Chicago Joint Center for Poverty Research.
  15. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," NBER Working Papers 8983, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  16. David Blau & Erdal Tekin, 2001. "The Determinants and Consequences of Child Care Subsidy Receipt by Low-Income Families," JCPR Working Papers 213, Northwestern University/University of Chicago Joint Center for Poverty Research.
  17. Robert Moffitt, 2002. "Welfare Programs and Labor Supply," NBER Working Papers 9168, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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