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Care or Cash? The Effect of Child Care Subsidies on Student Performance

  • Black, Sandra
  • Devereux, Paul J.
  • Løken, Katrine
  • Salvanes, Kjell G

Given the wide use of childcare subsidies across countries, it is surprising how little we know about the effect of these subsidies on children’s longer run outcomes. Using a sharp discontinuity in the price of childcare in Norway, we are able to isolate the effects of childcare subsidies on both parental and student outcomes. We find very small and statistically insignificant effects of childcare subsidies on childcare utilization and parental labor force participation. Despite this, we find significant positive effect of the subsidies on children’s academic performance in junior high school, suggesting the positive shock to disposable income provided by the subsidies may be helping to improve children’s scholastic aptitude.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8981.

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Date of creation: May 2012
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Handle: RePEc:cpr:ceprdp:8981
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  1. Tekin, Erdal, 2003. "Child Care Subsidies, Wages, And Employment of Single Mothers," Royal Economic Society Annual Conference 2003 200, Royal Economic Society.
  2. Berlinski, Samuel & Galiani, Sebastian & Manacorda, Marco, 2008. "Giving children a better start: Preschool attendance and school-age profiles," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1416-1440, June.
  3. Løken, Katrine Vellesen & Mogstad, Magne & Wiswall, Matthew, 2011. "What Linear Estimators Miss: The E ects of Family Income on Child Outcomes," Working Papers in Economics 02/11, University of Bergen, Department of Economics.
  4. Philip Oreopoulos & Marianne Page & Ann Huff Stevens, 2008. "The Intergenerational Effects of Worker Displacement," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 455-483, 07.
  5. David Blau & Erdal Tekin, 2007. "The determinants and consequences of child care subsidies for single mothers in the USA," Journal of Population Economics, Springer, vol. 20(4), pages 719-741, October.
  6. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
  7. Herbst, Chris M. & Tekin, Erdal, 2010. "The Impact of Child Care Subsidies on Child Well-Being: Evidence from Geographic Variation in the Distance to Social Service Agencies," IZA Discussion Papers 5102, Institute for the Study of Labor (IZA).
  8. Samuel Berlinski & Sebastian Galiani & Paul Gertler, 2006. "The effect of pre-primary education on primary school performance," IFS Working Papers W06/04, Institute for Fiscal Studies.
  9. Guido Imbens & Karthik Kalyanaraman, 2012. "Optimal Bandwidth Choice for the Regression Discontinuity Estimator," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 933-959.
  10. Milligan, Kevin & Stabile, Mark, 2007. "The integration of child tax credits and welfare: Evidence from the Canadian National Child Benefit program," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 305-326, February.
  11. Maria Fitzpatrick, 2008. "Preschoolers Enrolled and Mothers at Work? The Effects of Universal Pre-Kindergarten," Working Papers 08-04, Center for Economic Studies, U.S. Census Bureau.
  12. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs in Economics," NBER Working Papers 14723, National Bureau of Economic Research, Inc.
  13. David M. Blau, 2000. "Child Care Subsidy Programs," NBER Working Papers 7806, National Bureau of Economic Research, Inc.
  14. Erdal Tekin, 2004. "Child Care Subsidy Receipt, Employment, and Child Care Choices of Single Mothers," NBER Working Papers 10459, National Bureau of Economic Research, Inc.
  15. Jens Ludwig & Douglas L. Miller, 2005. "Does Head Start Improve Children's Life Chances? Evidence from a Regression Discontinuity Design," NBER Working Papers 11702, National Bureau of Economic Research, Inc.
  16. Tarjei Havnes & Magne Mogstad, 2011. "No Child Left Behind: Subsidized Child Care and Children's Long-Run Outcomes," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 97-129, May.
  17. Løken, Katrine Vellesen, 2007. "Family income and children's education: Using the Norwegian oil boom as a natural experiment," Working Papers in Economics 03/07, University of Bergen, Department of Economics.
  18. Carneiro, Pedro & Heckman, James J., 2003. "Human Capital Policy," IZA Discussion Papers 821, Institute for the Study of Labor (IZA).
  19. Janet Currie, 2009. "Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 87-122, March.
  20. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December.
  21. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-09, January.
  22. repec:oup:restud:v:79:y::i:3:p:933-959 is not listed on IDEAS
  23. David M. Blau, 1999. "The Effect Of Income On Child Development," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 261-276, May.
  24. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc.
  25. Shea, John, 2000. "Does parents' money matter?," Journal of Public Economics, Elsevier, vol. 77(2), pages 155-184, August.
  26. Pål Schøne, 2004. "Labour supply effects of a cash-for-care subsidy," Journal of Population Economics, Springer, vol. 17(4), pages 703-727, December.
  27. Dan Maurice Levy & Greg Duncan, 2000. "Using Sibling Samples to Assess the Effect of Childhood Family Income on Completed Schooling," JCPR Working Papers 168, Northwestern University/University of Chicago Joint Center for Poverty Research.
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