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The Effects of Child Care Subsidies on Paid Child Care Participation and Labor Market Outcomes: Evidence from the Child and Dependent Care Credit
Gabrielle Pepin ·
Summary
Written by AI, not yet AICS's view · claude-sonnet-5-5The report studies the US Child and Dependent Care Credit, a tax credit that lowers child care costs for working families. It uses the 2003 expansion of the credit, which raised its generosity by different amounts across states and family sizes. Using Current Population Survey data, it finds that a more generous credit increases the use of paid child care, especially among married mothers. It also finds that the credit increases labor supply among married mothers. The focus is on family child care use and maternal employment, not on direct measures of child well-being.
Key points
- A $100 increase in credit generosity raised paid child care participation by 0.6 percentage points among single mothers.
- A $100 increase in credit generosity raised paid child care participation by 2.2 percentage points among married mothers with children under 13.
- The credit increased labor supply among married mothers.
- Married mothers may experience long-run earnings gains.
Limitations
Only the abstract is available, so details on methods, data limits and the strength of the comparison are unclear. It does not measure outcomes for children, such as development or care quality, and it is set in the US only.
Abstract
The Child and Dependent Care Credit (CDCC), a tax credit based on income and child care expenses, reduces child care costs for working families. The Economic Growth and Tax Relief Reconciliation Act expanded the CDCC in 2003, generating differential increases in generosity across states and family sizes. Using data from the March Current Population Survey, the author finds that a $100 increase in CDCC generosity increases paid child care participation by 0.6 percentage points among single mothers and 2.2 percentage points among married mothers with children younger than 13 years old. The author also finds that CDCC benefits increase labor supply among married mothers, who may experience long-run earnings gains.
Findings the Hub has extracted
Each claim below is labelled by its type of design and links back to this report.
- Intervention
- The Child and Dependent Care Credit, a tax credit based on income and child care expenses, which was expanded in 2003.
- Population
- Single and married mothers with children younger than 13 in the US, from the March Current Population Survey.
Key finding
A $100 increase in credit generosity raised paid child care participation by 0.6 percentage points among single mothers.
Pepin · Crossref · 1 Jan 2024