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The Introduction of Universal Child Care in New Mexico: Initial Evidence on Mothers' Labor Supply

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  • Herbst, Chris

    (Arizona State University)

Abstract

In November 2025, New Mexico became the first U.S. state to implement a universal, no-cost child care subsidy program. This paper estimates difference-in-differences and event-study models to evaluate the impact of universal child care on mothers' short-run labor supply adjustments. Using monthly Current Population Survey data, I find that the reform produced different responses across lower- and higher-skilled mothers. For lower-skilled mothers, the policy increased employment along both the extensive and intensive margins. Conversely, higher-skilled mothers, particularly those who are married, experienced reductions in paid work, with partially offsetting increases in school enrollment. Thus, while universal child care relaxes a binding constraint among disadvantaged families, it acts as an in-kind transfer for their advantaged counterparts.

Suggested Citation

  • Herbst, Chris, 2026. "The Introduction of Universal Child Care in New Mexico: Initial Evidence on Mothers' Labor Supply," IZA Discussion Papers 18968, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18968
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    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare

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