The Effects of Child Care Subsidies on Maternal Labor Force Participation in the United States

 

This quasi-experimental study estimates the impact of child care subsidy policies on mothers’ employment. The findings from this project, conducted by the Urban Institute, are summarized in a research brief and discussed in detail in the study’s technical report. The study uses a rigorous difference-in-differences approach to estimate the effects of state-level spending, copayment rates, and income eligibility thresholds on the probability of employment and labor force participation by potentially eligible mothers. The study finds that higher child care subsidy expenditures significantly increase labor force participation and employment rates among low-income mothers. Consistent with prior research, the study indicates that a 10 percent increase in CCDF expenditures would result in a .68 percent increase in maternal employment among mothers with young children (birth to age 3). In real terms, if CCDF expenditures were tripled, this study estimates that approximately 652,000 women with young children would be newly employed. The study also found that lower copayment rates and higher income eligibility thresholds reduced the probability of mother’s labor force participation, but these findings were less robust.

Data from three sources were merged for the analyses: the Current Population Survey Annual Social and Economic Supplement (2003-2012); CCDF expenditures from ACF-696 data; and CCDF policy parameters from the CCDF State Policies Database (2003-2012).