Child Care Policy Reform and the Employment of Single Mothers

Objective. We estimate how the expansion of public child care subsidies from 1991–1996 contributed to single mothers' employment rates, controlling for other policy changes. Methods. Using new measures of child care spending that distinguish between subsidies for welfare‐reliant and working‐poor families, we compare their effect on the employment rates of single mothers with young children to those without. Results. We find that spending on child care subsidies for working families had substantial and significant positive effects on the employment of single mothers with young children. Conclusions. Dollar for dollar, the effects of child care subsidies were similar to, or greater than, those associated with tax policy changes. However, because increases in tax benefits dwarf those in child care subsidies and because one‐half of all means‐tested child care subsidies were directed toward welfare‐reliant families, tax policies are estimated to explain a larger share of the growth in single mothers' employment during the 1990s.