Child care subsidies and employment outcomes of low-income families

Abstract

This study examined the relationship between mothers' child care subsidy use and their earnings and labor force attachment. Using Wisconsin administrative data, this study examined 48months of subsidy use for mothers who became eligible for child care subsidies between March 2000 and February 2001 (n=8984). Comparing subsidy-eligible mothers who received subsidies and those who were eligible but did not, we estimated the likelihood of experiencing an increase (or decrease) in earnings and the likelihood of experiencing an increase (or decrease) in the number of quarters employed. We used multinomial regression models to estimate each economic outcome separately and used logistic regression models to estimate both of the outcomes together. In both separate and joint analyses of earnings and quarters employed, we found that subsidy receipt was associated with an increase in the probability of an increase in earnings and/or number of quarters employed and a decrease in the probability of a decrease in quarters employed. However, in general, these associations were only significant when mothers received a subsidy for 12months or more. These findings suggest the importance of identifying potential barriers to subsidy use, as stable receipt of subsidies may contribute to parents' economic well-being.