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Title: Child Care Expenditure and Mothers' Labor Supply: Evidence from the National Longitudinal Survey of Youth
Resulting in 1 citation.
1. Grubbs-Eller, Teresa Jo
Child Care Expenditure and Mothers' Labor Supply: Evidence from the National Longitudinal Survey of Youth
Ph.D. Dissertation, University of Maryland - College Park, 1989. DAI-A 51/03, p. 953, Sep 1990
Cohort(s): NLSY79
Publisher: UMI - University Microfilms, Bell and Howell Information and Learning
Keyword(s): Child Care; Children; Labor Force Participation; Labor Supply; Maternal Employment; Modeling, Multilevel; Mothers; Simultaneity; Work Hours

The tremendous growth during the 1970's and 1980's in the labor force participation rates of mothers with young children has made child care an important policy issue. Ad hoc stories of mothers being 'priced out of the work force by child care expenses' are abundant. Using data from the 1982 and 1985 panels of the National Longitudinal Survey of Youth, this dissertation clarifies the effect of child care expenditure on married mothers' labor supply. The first issue addressed is whether child care expenditure is a fixed cost of labor force participation or an hourly cost of work. A closely related issue considered is whether allowing for any fixed costs of work is necessary in modeling married mothers' labor supply decisions. If fixed costs of work are important, then the parameters of the labor force participation and hours supply decision are no longer jointly determined. The final issue considered is whether the child care expenditure and labor force participation decisions are simultaneous. If the unmeasured factors associated with child care expenditure are correlated with unmeasured factors associated with labor force participation, the ordinary least squares estimates of the parameters in the child care equation will be biased. The empirical evidence as to whether child care costs are fixed or variable is mixed. Three models of labor supply and child care expenditure are estimated. The first model assumes that child care is a variable cost and does not allow for any fixed costs of work. Here, the effect of child care expenditure was generally statistically significant. Child care expenditure acts much like a decrease in the wage. In the second and third models, which allow for fixed costs, child care expenditure significantly decreases the probability of labor force participation, but does not have a significant effect on hours supplied by workers, regardless of whether child care is assumed to be a fixed or a variable cost. The empirical results for models that allow for fixed costs suggest that fixed costs are important in determining labor supply. Working mothers appear to face higher costs per week than non-working mothers would face if they entered the labor force. My empirical results are used to evaluate the probable effects of proposed child care subsidies on married mothers' labor force participation. Simple exercises suggest that government subsidies for the cost of child care would generally have a substantial effect in increasing the probability of labor force participation if actual child care expenses were reimbursed through a voucher or refundable dependent car tax credit. General income subsidies to families with young children would not impact married mothers' labor force participation.
Bibliography Citation
Grubbs-Eller, Teresa Jo. Child Care Expenditure and Mothers' Labor Supply: Evidence from the National Longitudinal Survey of Youth. Ph.D. Dissertation, University of Maryland - College Park, 1989. DAI-A 51/03, p. 953, Sep 1990.