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The U.S. Child Care Crisis: Facts, Causes, and Policies

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  • So Kubota

    (Faculty of Political Science and Economics, Waseda University)

Abstract

Why does the United States lack affordable child care? I examine the long-term trend of the child care market and document a sharp price increase since the late 1990s. I show that a massive expansion of federal and state means-tested child care subsidies, which were intended to stimulate the market, instead crowded out child care supply. The evidence suggests that the subsidies discouraged home-based child care suppliers who were also working mothers. A simple calibrated equilibrium model captures the rising price, which eventually caused the female employment rate to decline. An effective policy should capitalize on the home-based care business.

Suggested Citation

  • So Kubota, 2020. "The U.S. Child Care Crisis: Facts, Causes, and Policies," Working Papers 2008, Waseda University, Faculty of Political Science and Economics.
    • Handle: RePEc:wap:wpaper:2008
    as

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    References listed on IDEAS

    as
    1. Herbst, Chris M., 2018. "The rising cost of child care in the United States: A reassessment of the evidence," Economics of Education Review, Elsevier, vol. 64(C), pages 13-30.
    2. Chris M. Herbst, 2017. "Universal Child Care, Maternal Employment, and Children’s Long-Run Outcomes: Evidence from the US Lanham Act of 1940," Journal of Labor Economics, University of Chicago Press, vol. 35(2), pages 519-564.
    3. Blau, Francine D. & Kahn, Lawrence M., 2013. "Female Labor Supply: Why is the US Falling Behind?," IZA Discussion Papers 7140, Institute of Labor Economics (IZA).
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    5. Pierre Lefebvre & Philip Merrigan, 2008. "Child-Care Policy and the Labor Supply of Mothers with Young Children: A Natural Experiment from Canada," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 519-548, July.
    6. Bauernschuster, Stefan & Schlotter, Martin, 2015. "Public child care and mothers' labor supply—Evidence from two quasi-experiments," Journal of Public Economics, Elsevier, vol. 123(C), pages 1-16.
    7. Datta Gupta, Nabanita & Simonsen, Marianne, 2010. "Non-cognitive child outcomes and universal high quality child care," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 30-43, February.
    8. Stefania Albanesi & María José Prados, 2022. "Slowing Women's Labor Force Participation: The Role of Income Inequality," NBER Working Papers 29675, National Bureau of Economic Research, Inc.
    9. David Blau & Erdal Tekin, 2007. "The determinants and consequences of child care subsidies for single mothers in the USA," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(4), pages 719-741, October.
    10. Rodgers, Luke P., 2018. "Give credit where? The incidence of child care tax credits," Journal of Urban Economics, Elsevier, vol. 108(C), pages 51-71.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Child care market; Female labor supply; Child care subsidies;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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