THE NEED FOR SAFE CHILD CARE


 


Child care subsidies are an important policy instrument to facilitate the transition of welfare recipients into employment. Indeed, several studies show that the cost of child care is an important constraint to helping disadvantaged mothers find employment (Anderson & Levine, 2000; Blau & Robins, 1988; Blau & Tekin, 2007; Han & Waldfogel, 2001; Kimmel, 1998; Tekin, 2005, 2007). As a result, the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) reorganized the patchwork child care subsidy system. In particular, Congress consolidated several preexisting subsidy programs into a single block grant, the Child Care and Development Fund (CCDF). Federal and state expenditures for child care assistance increased substantially, and states were given greater authority over program design and administration. In 2005, states spent approximately .4 billion on child care subsidies and served 1.7 million children in an average month (Child Care Bureau, 2005a). A sizable body of research examines the impact of child care subsidy receipt on mothers’ employment and child care decisions (e.g., Blau & Tekin, 2007; Herbst, 2008b; Meyers, Heintze, & Wolf, 2002; Tekin, 2005, 2007). Findings from these studies indicate that subsidies are effective in moving single mothers into paid employment and shifting children from informal child care settings into the formal market. However, researchers have neglected the question of whether child care subsidies have implications for child development. The relevance of this issue is clear, given that expenditure on and recipients of child care subsidies exceed other early childhood intervention programs. Furthermore, research shows that developmental experiences during the first few years of a child’s life have lasting effects on cognitive and behavioral well-being (Heckman & Materov, 2004; Le, Miller, Heath, & Martin, 2005; Lynch, 2004). Since most child care subsidies are used to purchase center-based care—which has been found to promote child development in some studies—it is commonly assumed that subsidies should also have positive effects on wellbeing. However, it is unclear a priori whether subsidies are beneficial or detrimental to child outcomes. There are three primary channels through which child care assistance policies can influence child outcomes. First, mothers must be employed to be eligible for a subsidy, and recent evidence suggests that early maternal employment is negatively associated with child development (Bernal, 2008; BrooksGunn, Han, & Waldfogel, 2002; James-Burdumy, 2005; Liu, Mroz, & Van der Klaauw, 2003; Ruhm, 2004). Second, subsidies create incentives to purchase nonparental child care. The evidence here is mixed, with some studies finding positive effects for child care attendance (Loeb, Fuller, Kagan, & Carrol, 2004; NICHD, 2003a, 2003b) and others finding insignificant or negative effects (Baydar & BrooksGunn, 1991; Bernal & Keane, 2008; Desai, Chase-Lansdale, & Robert, 1989). There is more agreement, however, that high-quality center-based care has positive effects on cognitive development, particularly for low-income children (Hill, Waldfogel, & Brooks-Gunn, 2002; NICHD & Duncan, 2003; Peisner-Feinberg et al., 2001). Finally, child care subsidies free up income for parents to spend on private consumption and goods that enhance child quality. The extent to which additional income is spent on private consumption versus child quality depends on the relative size of the income elasticities. This relationship is further complicated by the presence of several design features embedded in the CCDF that have implications for child care quality. Arguably the most important design feature is the principle of “parental choice,” in which parents are free to use subsidies to purchase virtually any legally operating child care provider, including those operating outside states’ regulatory regimes. Furthermore, conditioning eligibility for subsidies on employment and income creates challenges for maintaining stable child care arrangements. In particular, if changes in employment and income status are related to lapses in subsidy receipt, such instability could undermine child well-being by severing productive child-teacher relationships and exposing children to comparatively low-quality care during unsubsidized periods.


States’ reimbursement rates—or the maximum amount a state agency pays a given provider—can also influence quality. Reimbursements are usually below the federally recommended level, limiting families’ access to high-quality care. This may also reduce incentives for providers to make important quality enhancements. In general, the aim of current subsidy policy is to support employment among low-income families, while placing few restrictions on child care quality (Gormley, 2007).


 


References


 


Anderson, P., Butcher, K., & Levine, P. (2003). Maternal employment and overweight children. Journal of Health Economics, 22, 477–504.


Blau, D., & Robins, P. (1988). Child care costs and family labor supply. Review of Economics and Statistics, 70, 374–381.


Blau, D., & Tekin, E. (2007). The determinants and consequences of child care subsidies for single mothers in the USA. Journal of Population Economics, 20, 719–741.


Blau, F., & Grossberg, A. (1992). Maternal labor supply and children’s cognitive development. Review of Economics and Statistics, 74, 474–481.


Han, W., & Waldfogel, J. (2001). Child care costs and women’s employment: A comparison of single and married mothers with pre-school age children. Social Science Quarterly, 82, 552–568.


Han, W., Waldfogel, J., & Brooks-Gunn, J. (2001). The effects of early maternal employment on later cognitive and behavioral outcomes. Journal of Marriage and Family, 63, 336–354.


Meyers, M., Heintze, T., & Wolf, D. (2002). Child care subsidies and the employment of welfare recipients. Demography, 39, 165–180.


Meyers, M., Peck, L., Davis, E., Collins, A., Kreader, J. L., Georges, A., et al. (2002). The dynamics of child care subsidy use: A collaborative study of five states. New York: National Center on Children in Poverty, Columbia University.


Tekin, E. (2005). Child care subsidy receipt, employment, and child care choices of single mothers. Economics Letters, 89, 1–6.


Tekin, E. (2007). Single mothers working at night: Standard work, child care subsidies, and implications for welfare reform. Economic Inquiry, 45, 233–250.



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