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The Effect of Child Care Costs on the Employment and Welfare Recipiency of Single Mothers

Author

Listed:
  • Rachel Connelly

    () (Department of Economics, Bowdoin College)

  • Jean Kimmel

    () (Department of Economics, Western Michigan University)

Abstract

This paper considers the effect of child care costs on two labor market outcomes for single mothers—whether to work for pay and whether to receive welfare. Hourly child care expenditures are estimated using data drawn from the 1992 and 1993 panels of the Survey of Income and Program Participation (SIPP). These expenditures are then used to predict the probability of welfare recipiency and employment. While the direction and significance of key variables are robust to changes in specification, the quantitative results are found to be sensitive to identification restrictions. All results show a substantial positive effect of child care costs on welfare recipiency, with the child care price elasticity of welfare recipiency varying from 1.0 to 1.9. Similarly, we find a significant negative effect of child care price on employment with elasticity estimates from ?.3 to ?1.1, showing that controlling for the welfare choice does not reduce the price elasticity of employment found in other studies.

Suggested Citation

  • Rachel Connelly & Jean Kimmel, 2003. "The Effect of Child Care Costs on the Employment and Welfare Recipiency of Single Mothers," Southern Economic Journal, Southern Economic Association, vol. 69(3), pages 498-519, January.
  • Handle: RePEc:sej:ancoec:v:69:3:y:2003:p:498-519
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    Cited by:

    1. Edwin van Gameren & Durfari Velandia Naranjo, 2015. "Working and Caring: The Simultaneous Decision of Labor Force Participation and Informal Elderly and Child Support Activities in Mexico," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 52(2), pages 117-148, November.
    2. Chris Herbst, 2010. "The labor supply effects of child care costs and wages in the presence of subsidies and the earned income tax credit," Review of Economics of the Household, Springer, vol. 8(2), pages 199-230, June.
    3. Robert J. Lemke & Robert Witt & Ann Dryden White, 2007. "The Transition from Welfare to Work," Eastern Economic Journal, Eastern Economic Association, vol. 33(3), pages 359-373, Summer.
    4. Edwin van Gameren, 2013. "The Role of Economic Incentives and Attitudes in Participation and Childcare Decisions," Journal of Family and Economic Issues, Springer, vol. 34(3), pages 296-313, September.
    5. Herbst, Chris M., 2013. "Universal Child Care, Maternal Employment, and Children's Long-Run Outcomes: Evidence from the U.S. Lanham Act of 1940," IZA Discussion Papers 7846, Institute for the Study of Labor (IZA).
    6. Herbst, Chris M., 2015. "The Rising Cost of Child Care in the United States: A Reassessment of the Evidence," IZA Discussion Papers 9072, Institute for the Study of Labor (IZA).
    7. Cristina Borra, 2010. "Childcare cost and Spanish mother’s labour force participation," Hacienda Pública Española, IEF, vol. 194(3), pages 9-40, October.
    8. Paula Albuquerque & José Passos, 2010. "Grandparents and women's participation in the labor market," Working Papers Department of Economics 2010/16, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    9. Andreassen, Leif & Di Tommaso, Maria Laura & Maccagnan, Anna, 2015. "Do Men Care? Men’s Supply Of Unpaid Labour," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201545, University of Turin.
    10. Lincove, Jane Arnold, 2009. "Determinants of schooling for boys and girls in Nigeria under a policy of free primary education," Economics of Education Review, Elsevier, vol. 28(4), pages 474-484, August.
    11. Ha, Yoonsook & Miller, Daniel P., 2015. "Child care subsidies and employment outcomes of low-income families," Children and Youth Services Review, Elsevier, vol. 59(C), pages 139-148.
    12. Randy Albelda & Michael Carr, 2017. "One Step Forward, One Step Back? Labor Supply Effects of Minimum Wage Increases on Single Parents with Public Child Care Support," Working Papers 2017_01, University of Massachusetts Boston, Economics Department.
    13. Ashlesha Datar, 2006. "The impact of kindergarten entrance age policies on the childcare needs of families," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 25(1), pages 129-153.
    14. Taryn W. Morrissey, 2017. "Child care and parent labor force participation: a review of the research literature," Review of Economics of the Household, Springer, vol. 15(1), pages 1-24, March.
    15. Benjamín Villena-Rodán & Cecilia Ríos-Aguilar, 2011. "Causal Effects of Maternal Time-Investment on Children's Cognitive Outcomes," Documentos de Trabajo 285, Centro de Economía Aplicada, Universidad de Chile.
    16. Kimmel, Jean & Connelly, Rachel, 2006. "Is Mothers' Time With Their Children Home Production or Leisure?," IZA Discussion Papers 2058, Institute for the Study of Labor (IZA).
    17. Davis, Elizabeth E. & Li, NaiChia, 2009. "Regional Variation in Child Care Prices: A Cross-State Analysis," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 39(1).
    18. Y.E. Akgündüz & J. Plantenga, 2015. "Childcare Prices and Maternal Employment: a Meta-Analysis," Working Papers 15-14, Utrecht School of Economics.

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