Child care subsidies and the stability and quality of child care arrangements

Abstract

Each month, the child care subsidy program helps nearly a million low-income families pay for child care. The financial support of a child care subsidy might be expected to increase stability and quality of care, which are characteristics of care that support child development. However, there are concerns that short durations of subsidy receipt may increase child care instability. Further, there is debate about whether subsidy receipt leads to the use of higher or lower quality care. In this study we use longitudinal survey data on low-income families and linked administrative data on subsidy receipt to investigate the stability and reported quality of child care arrangements. Because we observe the same children repeatedly over time, both when they are and are not receiving child care subsidies, we use child fixed-effects models to address the selection problems that otherwise would bias the relationships among subsidy, stability, and quality. We find that when children received child care subsidies they experienced higher quality care as reported by parents. Yet there was no difference in the stability of care arrangements while receiving subsidy compared to when not receiving subsidy. Additionally, children often had multiple providers concurrently, regardless of subsidy receipt. These results suggest that child care subsidy receipt may promote positive child outcomes due to increased access to higher quality care without worsening the stability of care.