Association for Public Policy Analysis & Management

Child care market in the US is a major occupational destination of low-skilled female immigrants into the US. Using US decennial census data and American Community Survey data from the US Census Bureau over 1980-2011, we estimate the impact of this low-skilled immigration on occupational displacement, wages and contemporaneous school enrollment of the US child care workforce. Using a shift-share instrument variable approach based on past settlements we exploit the geographical variation in the settlement patterns of low-skilled immigrants. Our IV 2SLS estimates on occupational displacement indicate that high-skilled and white native childcare workers based in home based child care and school/center based childcare are the ones displaced by foreign child care workers. We find heterogeneous impacts on wages among child care workers. Our IV 2SLS estimates indicate that non-white natives, low educated natives, and previous waves of immigrants are the demographic group of child care workforce who experienced downward pressure on wages, while white natives, high educated natives are the ones who saw positive impact on wages. In our sector-wise analysis, we find that private-household based child care workers experience large downward pressure on their wages, while home-based and center-based child care workers did not face any downward pressure on their wages. Low-educated natives, particularly those working in the private-household based childcare workforce respond by increasing school enrollment, as captured by our IV 2SLS estimates on school enrollment.