IDEAS home Printed from https://ideas.repec.org/p/mab/wpaper/2017_01.html
   My bibliography  Save this paper

One Step Forward, One Step Back? Labor Supply Effects of Minimum Wage Increases on Single Parents with Public Child Care Support

Author

Listed:
  • Randy Albelda
  • Michael Carr

Abstract

Cliff effects, or high marginal tax rates, occur when low-income workers using anti-poverty supports experience an increase in earnings that results in a substantial decrease in those supports, resulting in no gain in total resources. Cliff effects create a disincentive to work more hours or take a higher paying job. To investigate labor supply responses when faced with cliff effects, we use changes in federal and state minimum wages to estimate the responsiveness of work hours for single mothers with a childcare subsidy. Using single mothers with young children who are eligible to receive a childcare subsidy but do not as a control group, we estimate difference-in-differences models using the 2008 panel of the Survey of Income and Program Participation (SIPP). We find evidence that employed mothers with subsidies reduce hours more than those without subsidies after minimum wage increases, nearly offsetting the earnings increase.

Suggested Citation

  • 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.
  • Handle: RePEc:mab:wpaper:2017_01
    as

    Download full text from publisher

    File URL: http://repec.umb.edu/RePEc/files/2017_01.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Holt, Stephen D. & Romich, Jennifer L., 2007. "Marginal Tax Rates Facing Low– and Moderate–Income Workers Who Participate in Means–Tested Transfer Programs," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(2), pages 253-276, June.
    2. Sylvia Allegretto & Arindrajit Dube & Michael Reich & Ben Zipperer, 2017. "Credible Research Designs for Minimum Wage Studies," ILR Review, Cornell University, ILR School, vol. 70(3), pages 559-592, May.
    3. Raj Chetty & Emmanuel Saez, 2013. "Teaching the Tax Code: Earnings Responses to an Experiment with EITC Recipients," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 1-31, January.
    4. Erdal Tekin, 2007. "Childcare Subsidies, Wages, and Employment of Single Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 42(2).
    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;European Society for Population Economics, vol. 20(4), pages 719-741, October.
    6. Reich, Michael & West, Rachel, 2015. "The Effects of Minimum Wages on Food Stamp Enrollment and Expenditures," Institute for Research on Labor and Employment, Working Paper Series qt0wh9z8x4, Institute of Industrial Relations, UC Berkeley.
    7. Susan L. Averett & H. Elizabeth Peters & Donald M. Waldman, 1997. "Tax Credits, Labor Supply, And Child Care," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 125-135, February.
    8. Herbst, Chris M., 2008. "Who are the eligible non-recipients of child care subsidies?," Children and Youth Services Review, Elsevier, vol. 30(9), pages 1037-1054, September.
    9. Keisuke Hirano & Guido W. Imbens & Geert Ridder, 2003. "Efficient Estimation of Average Treatment Effects Using the Estimated Propensity Score," Econometrica, Econometric Society, vol. 71(4), pages 1161-1189, July.
    10. 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.
    11. Clemens, Jeffrey & Wither, Michael, 2019. "The minimum wage and the Great Recession: Evidence of effects on the employment and income trajectories of low-skilled workers," Journal of Public Economics, Elsevier, vol. 170(C), pages 53-67.
    12. Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1931-1958, August.
    13. 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.
    14. Charles Michalopoulos & Philip K. Robins & Irwin Garfinkel, 1992. "A Structural Model of Labor Supply and Child Care Demand," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 166-203.
    15. Randy Albelda, 2011. "Time Binds: US Antipoverty Policies, Poverty, and the Well-Being of Single Mothers," Feminist Economics, Taylor & Francis Journals, vol. 17(4), pages 189-214, October.
    16. Marcia Meyers & Theresa Heintze & Douglas Wolf, 2002. "Child care subsidies and the employment of welfare recipients," Demography, Springer;Population Association of America (PAA), vol. 39(1), pages 165-179, February.
    17. Eissa, Nada & Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup, 2008. "Evaluation of four tax reforms in the United States: Labor supply and welfare effects for single mothers," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 795-816, April.
    18. Michael Reich & Rachel West, 2015. "The Effects of Minimum Wages on Food Stamp Enrollment and Expenditures," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(4), pages 668-694, October.
    19. Maag, Elaine & Steuerle, C. Eugene & Chakravarti, Ritadhi & Quakenbush, Caleb, 2012. "How Marginal Tax Rates Affect Families at Various Levels of Poverty," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(4), pages 759-782, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    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:mab:wpaper:2017_01. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Arjun Jayadev) The email address of this maintainer does not seem to be valid anymore. Please ask Arjun Jayadev to update the entry or send us the correct email address. General contact details of provider: http://edirc.repec.org/data/deumbus.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.