Employment of New Mothers and Child Care Choice: Differences by Children's Age

Abstract

Working women frequently withdraw from the formal labor market for a period of time following their 1st birth. While more than 1/3 of these mothers return to work within 3 months 1/2 remain out of formal employment 2 years after giving birth. This paper examines the determinants of womens return to the labor market within 2 years of childbirth and the type of child care women choose. Employing data from the National Longitudinal Survey of Youth the study found economic incentives to have powerful effects upon mothers work behavior. Despite cultural norms which may encourage mothers to care for their very young children mothers wages and other family income were important determinants. The relationship between child care costs and work and child care choice change as children age with mothers being most sensitive to the psychic and financial costs of care in the months immediately following childbirth. Specifically the presence of mothers personal wages relates positively to early return to work and higher family income delays return to work. Greater child care tax credits increase the return to work within 3 months yet have little effect on later labor supply. Neither wages income nor tax credits significantly affected child care choice. Overall financial variables had less impact on type of child care than on the decision to work.