Child Care Costs and Lone Mothers’ Employment Rates: UK Evidence

Abstract

The most commonly cited explanations for the low employment rates of British lone mothers are disincentives provided by the benefit system and a lack of suitable jobs or affordable child care. This is the first British study focusing on lone mothers’ employment rates which includes direct measures of child care costs. Using data from the 1989 Lone Parents Survey, we find significant disincentive effects for child care costs, albeit of a smaller magnitude than in some related studies. There are also some novel findings about knowledge of the benefit system, and measures of human capital and financial stability and security.