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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
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    File URL: https://www2.census.gov/library/working-papers/2025/adrm/ces/CES-WP-25-25.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    childcare; female labor force participation; child penalty;
    All these 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

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