Full Citation
Title: The Long-Run Effects of Childcare Subsidies on Maternal Labor Market Outcomes
Citation Type: Miscellaneous
Publication Year: 2023
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Abstract: Over half of the parents who use childcare spend more than 20 percent of their household income on childcare expenses. Recent research has shown that childcare subsidies increase women's attachment to the labor force. However, most political focus has been on interventions for preschool-aged children, which may come after many women have already made their decision to rejoin the labor force or "stay-at-home". This paper investigates the long-run impact of childcare subsidies offered soon after first birth on a women's employment, earnings, and total hours worked. Using restricted data which links earnings records from the SSA/IRS to the SIPP 1984-2009 panels and the PSID, I implement a dynamic difference-indifference model that exploits variation in the timing of birth and the 2003 expansion to the Child and Dependent Care Credit. I find that women exposed to the expansion when their children are young are more likely to work and have higher earnings. Early exposed women are 1.2 to 2.5 percentage points more likely to be employed zero to four years after giving birth, suggesting they return to work sooner. This effect grows in the long run. Early exposed women are 3.1 to 5.2 percentage points more likely to be employed five to ten years after giving birth, suggesting they are more likely to remain employed. This translates to large earnings returns for early exposed women. Five to ten years after giving birth early exposed women earn between $5,600-$6,300 more per year.
Url: https://amerceg.github.io/mywebsite/JMP.pdf
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Authors: Erceg, Ashley
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Data Collections: IPUMS CPS
Topics: Work, Family, and Time
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