In the wake of the COVID-pandemic, declines in child care-industry employment restricted the availability of child care, which strained families’ already costly access to care. To remedy this problem, in March 2021 the Biden Administration made a historic investment in the U.S. child care industry by providing $24 billion in subsidies to child care providers (White House 2021). Using difference-in[1]difference event-study approaches that use carefully selected comparison groups, the analysis isolates the effect of these stabilization funds on the child care market and maternal labor supply. The first part of the analysis presents a series of patterns that, taken as a whole, indicate that the stabilization funds were effective at increasing child care access. Evidence suggests that stabilization funds led to lower relative price growth in the child care industry, more child care workers (a rough proxy for increased supply), and higher wages for child care workers. The second part of the analysis, seeks to identity the causal effect of this stabilization on maternal labor supply. Using mothers with children over age 6 or women without children (those less likely to benefit directly from the funds) as a basis for comparison, the labor force participation of mothers of young children increased by between 2 and 3 percentage points after stabilization funds were made available. Because (a) all women would have been affected by underlying trends such as working from home and (b) these relative changes occur right after ARP stabilization, these patterns likely reflect the effect of ARP child care stabilization net of other potentially confounding factors. (author abstract)
Did stabilization funds help mothers get back to work after the COVID-19 recession?
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Reports & Papers
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United States
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