Child care subsidy patterns: Are exits related to economic setbacks or economic successes?

Using a recent cohort of single mothers who received child care subsidies, this study explores the extent to which low-income families utilize subsidies, factors associated with subsidy exit, and whether these factors have differential influences on the various types of exit from the subsidy program (i.e., exit with high earnings, low earnings, or job loss). The study uses Wisconsin administrative data and explores five years of subsidy receipt by families who began receiving subsidies between March 2000 and February 2001. Separate analyses are conducted for mothers with pre-school-age children and mothers with school-age children. Using discrete-time event-history models, the analyses find that subsidy spells tend to end relatively quickly; 55% of mothers with pre-school-age children and 75% of mothers with school-age children left the program within one year after they began receiving subsidies, and most exits are for economic setbacks (job loss or low earnings). The analyses also find that human capital factors, characteristics that represent demand for child care, and contextual factors are all significantly related to subsidy exits, but in different ways for different exit types. The study also highlights differences in subsidy patterns between mothers with pre-school-age and school-age children. Policy and practice implications are discussed.