IDEAS home Printed from https://ideas.repec.org/p/cen/wpaper/25-25.html
   My bibliography  Save this paper

The Impact of Childcare Costs on Mothers’ Labor Force Participation

Author

Listed:
  • Valeska Araujo
  • Linden McBride
  • Danielle H. Sandler

Abstract

The rising costs of childcare pose challenges for families, leading to difficult choices including those impacting mothers’ labor force participation. This paper investigates the relationship between childcare costs and maternal employment. Using data from the National Database of Childcare Prices, the American Community Survey, and the Longitudinal Employer Household Dynamics, we estimate the impact of childcare costs on mothers’ labor force participation through two empirical strategies. A fixed-effects approach controls for geographic and temporal heterogeneity in costs as well as mothers’ idiosyncratic preferences for work and childcare, while an instrumental variables approach addresses the endogeneity of mothers’ preferences for work and childcare by leveraging exogenous geographic and temporal variation in childcare licensing requirements. Our findings across both research designs indicate that higher childcare costs reduce labor force participation among mothers, with lower-income mothers exhibiting greater responsiveness to changes in childcare costs.

Suggested Citation

  • Valeska Araujo & Linden McBride & Danielle H. Sandler, 2025. "The Impact of Childcare Costs on Mothers’ Labor Force Participation," Working Papers 25-25, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:25-25
    as

    Download full text from publisher

    File URL: https://www2.census.gov/library/working-papers/2025/adrm/ces/CES-WP-25-25.pdf
    File Function: First version, 2025
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David M. Blau, 2003. "Do child care regulations affect the child care and labor markets?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(3), pages 443-465.
    2. Jessica H. Brown, 2018. "Does Public Pre-K Have Unintended Consequences on the Child Care Market for Infants and Toddlers?," Working Papers 626, Princeton University, Department of Economics, Industrial Relations Section..
    3. Erdal Tekin, 2007. "Childcare Subsidies, Wages, and Employment of Single Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 42(2).
    4. 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.
    5. V. Joseph Hotz & Mo Xiao, 2011. "The Impact of Regulations on the Supply and Quality of Care in Child Care Markets," American Economic Review, American Economic Association, vol. 101(5), pages 1775-1805, August.
    6. Neumark, David & Shirley, Peter, 2020. "The Long-Run Effects of the Earned Income Tax Credit on Women's Labor Market Outcomes," Labour Economics, Elsevier, vol. 66(C).
    7. Gabrielle Pepin, 2025. "The Effects of Child Care Subsidies on Paid Child Care Participation and Labor Market Outcomes: Evidence from the Child and Dependent Care Credit," ILR Review, Cornell University, ILR School, vol. 78(4), pages 645-666, August.
    8. Pihl, Ariel Marek, 2022. "Head Start and mothers’ work: Free child care or something more?," Labour Economics, Elsevier, vol. 75(C).
    9. Charles Baum, 2002. "A dynamic analysis of the effect of child care costs on the work decisions of low-income mothers with infants," Demography, Springer;Population Association of America (PAA), vol. 39(1), pages 139-164, February.
    10. John M. Abowd & Bryce E. Stephens & Lars Vilhuber & Fredrik Andersson & Kevin L. McKinney & Marc Roemer & Simon Woodcock, 2009. "The LEHD Infrastructure Files and the Creation of the Quarterly Workforce Indicators," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 149-230, National Bureau of Economic Research, Inc.
    11. Brantly Callaway & Andrew Goodman-Bacon & Pedro H. C. Sant'Anna, 2021. "Difference-in-Differences with a Continuous Treatment," Papers 2107.02637, arXiv.org, revised Jun 2025.
    12. Elizabeth U. Cascio, 2009. "Maternal Labor Supply and the Introduction of Kindergartens into American Public Schools," Journal of Human Resources, University of Wisconsin Press, vol. 44(1).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chris M. Herbst, 2023. "Child Care In The United States: Markets, Policy, And Evidence," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(1), pages 255-304, January.
    2. Herbst, Chris M., 2022. "Child Care in the United States: Markets, Policy, and Evidence," IZA Discussion Papers 15547, Institute of Labor Economics (IZA).
    3. Müller, Kai-Uwe & Wrohlich, Katharina, 2020. "Does subsidized care for toddlers increase maternal labor supply? Evidence from a large-scale expansion of early childcare," Labour Economics, Elsevier, vol. 62(C).
    4. 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.
    5. Zanoni Wladimir & Weinberger Gabriel, 2015. "Effects of Childcare Subsidies on Employment and Earnings of Low-Income Mothers," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(2), pages 589-619, April.
    6. Givord, Pauline & Marbot, Claire, 2015. "Does the cost of child care affect female labor market participation? An evaluation of a French reform of childcare subsidies," Labour Economics, Elsevier, vol. 36(C), pages 99-111.
    7. Elizabeth E. Davis & Caroline Carlin & Caroline Krafft & Nicole D. Forry, 2018. "Do Child Care Subsidies Increase Employment Among Low-Income Parents?," Journal of Family and Economic Issues, Springer, vol. 39(4), pages 662-682, December.
    8. Chris M. Herbst & Erdal Tekin, 2010. "The Impact of Child Care Subsidies on Child Well-Being: Evidence from Geographic Variation in the Distance to Social Service Agencies," NBER Working Papers 16250, National Bureau of Economic Research, Inc.
    9. Samuel Berlinski & Maria Marta Ferreyra & Luca Flabbi & Juan David Martin, 2024. "Childcare Markets, Parental Labor Supply, and Child Development," Journal of Political Economy, University of Chicago Press, vol. 132(6), pages 2113-2177.
    10. Gibbs, Chloe & Wikle, Jocelyn & Wilson, Riley, 2025. "A Matter of Time? Measuring Effects of Public Schooling Expansions on Families," IZA Discussion Papers 17969, Institute of Labor Economics (IZA).
    11. Herbst, Chris M., 2018. "The impact of quality rating and improvement systems on families’ child care choices and the supply of child care labor," Labour Economics, Elsevier, vol. 54(C), pages 172-190.
    12. Yusuf Emre Akgunduz & Janneke Plantenga, 2018. "Child Care Prices And Maternal Employment: A Meta†Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 118-133, February.
    13. 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 of Labor Economics (IZA).
    14. Wang, Qing & Lin, Mengyun, 2019. "Work-family policy and female entrepreneurship: Evidence from China's subsidized child care program," China Economic Review, Elsevier, vol. 54(C), pages 256-270.
    15. Garrett Anstreicher & Joanna Venator, 2022. "To Grandmother’s House We Go: Childcare Time Transfers and Female Labor Mobility," Boston College Working Papers in Economics 1051, Boston College Department of Economics.
    16. 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.
    17. Chloe R. Gibbs & Jocelyn Wikle & Riley Wilson, 2024. "A Matter of Time? Measuring Effects of Public Schooling Expansions on Families’ Constraint," CESifo Working Paper Series 11200, CESifo.
    18. Y.E. Akgündüz & J. Plantenga, 2015. "Childcare Prices and Maternal Employment: a Meta-Analysis," Working Papers 15-14, Utrecht School of Economics.
    19. 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.
    20. Sandra E. Black & Paul J. Devereux & Katrine V. L�ken & Kjell G. Salvanes, 2014. "Care or Cash? The Effect of Child Care Subsidies on Student Performance," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 824-837, December.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cen:wpaper:25-25. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dawn Anderson (email available below). General contact details of provider: https://edirc.repec.org/data/cesgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.