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Child care and parent labor force participation: a review of the research literature

Abstract

Early care and education (ECE) enables parental employment and provides a context for child development. Theory suggests that lower child care costs, through subsidized care or the provision of free or low-cost arrangements, would increase the use of ECE and parents’ employment and work hours. This paper reviews the research literature examining the effects of child care costs and availability on parental employment. In general, research suggests that reduced out-of-pocket costs for ECE and increased availability of public ECE increases ECE attendance among young children, and has positive impacts on mothers’ labor force participation and work hours. However, there is considerable heterogeneity in findings. Among U.S. studies that report the elasticity of employment to ECE price, estimates range from −0.025 to −1.1, with estimates clustering near 0.05–0.25. This indicates that a 10 % reduction in the price of child care would lead to a 0.25–11 % increase in maternal employment, likely near 0.5–2.5 %. In general, studies using more recent data or data from non-U.S. countries find smaller elasticities than those using U.S. data from the 1990s. These differences may be due to historical and cross-national differences in ECE attendance, labor force attachment, and educational attainment among mothers with young children, as well as heterogeneity in the methodological approaches and data used across studies. More research in the U.S. using contemporary data is needed, particularly given recent changes in U.S. ECE policy.

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Notes

  1. 1.

    Source: 2011 Survey of Income and Program Participation (SIPP).

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Acknowledgments

This literature review was supported by the Division of Human Services Policy in the Office of the Assistant Secretary for Planning and Evaluation (ASPE), in the U.S. Department of Health and Human Services. The opinions and conclusions expressed herein are solely those of the author and should not be construed as representing the opinions or policies of the HHS or any agency of the Federal Government.

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Correspondence to Taryn W. Morrissey.

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Morrissey, T.W. Child care and parent labor force participation: a review of the research literature. Rev Econ Household 15, 1–24 (2017). https://doi.org/10.1007/s11150-016-9331-3

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Keywords

  • Child care
  • Early education
  • Parent labor force participation
  • Child care subsidies
  • Child care costs
  • Child care availability

JEL Classification

  • J13
  • J22