Panel Paper:
Long-Term Effects of Child Care Assistance Policies
Monday, April 10, 2017
:
11:25 AM
HUB 260 (University of California, Riverside)
*Names in bold indicate Presenter
The majority of families in the United States lack the support needed to make the best decisions when balancing employment demands and raising children. The child care decisions parents make have important short run and long run socioeconomic consequences. In the short run, these decisions will affect household income, labor outcomes for parents, and the composition of the labor force. In the long run, these decisions will affect the development of children during early childhood and their future labor market outcomes. The goal of this study is to better understand the consequences of policies that have an effect on the investment decisions parents make during early childhood. Specifically, this project aims to identify the effects of child care assistance policies (namely, state funded means tested child care subsidies) on children’s long-run outcomes, including educational attainment and labor market outcomes. To answer these research questions we use a reduced form quasi-experimental approach that takes advantage of the natural variation in state child care assistance policies after the welfare reform of 1996. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 allowed states to administer their own funds, resulting in heterogeneity in terms of eligibility criteria and availability/generosity of funds. This study will take advantage of this state-year variation of potential child care assistance exposure during early childhood (ages 0 to 6) and determine the effects of these during early adulthood (ages 18 and 24) on educational attainment, employment, and earnings. We use a measure of potential exposure instead of actual subsidies to minimize issues of endogeneity. This project plans to use data from the Panel Study of Income Dynamics (PSID), the Child Care and Development Fund (CCDF) Policies Database, and the Administration for Children and Families’ (ACF) Child Care Development Fund Administrative Database. Combining the two administrative datasets will allow us to create a measure of potential exposure to child care subsidies. Outcomes of interests will be obtained from the PSID. Policies that affect the labor outcomes of both parents and their children will also be able to focus on the issues of intergenerational transmission of inequality. Well formulated public finance policies may be able to reduce the cycle of poverty and level the playing field for children of low-income families.
