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The Effect of Child Care Costs on the Employment and Welfare Recipiency of Single Mothers
Author(s) -
Connelly Rachel,
Kimmel Jean
Publication year - 2003
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2003.tb00510.x
Subject(s) - welfare , economics , child care , price elasticity of demand , labour economics , survey of income and program participation , demographic economics , elasticity (physics) , single mothers , medicine , psychology , microeconomics , nursing , developmental psychology , materials science , market economy , composite material
This paper considers the effect of child care costs on two labor market outcomes for single mothers—whether to work for pay and whether to receive welfare. Hourly child care expenditures are estimated using data drawn from the 1992 and 1993 panels of the Survey of Income and Program Participation (SIPP). These expenditures are then used to predict the probability of welfare recipiency and employment. While the direction and significance of key variables are robust to changes in specification, the quantitative results are found to be sensitive to identification restrictions. All results show a substantial positive effect of child care costs on welfare recipiency, with the child care price elasticity of welfare recipiency varying from 1.0 to 1.9. Similarly, we find a significant negative effect of child care price on employment with elasticity estimates from ‐.3 to ‐1.1, showing that controlling for the welfare choice does not reduce the price elasticity of employment found in other studies.