Direct and Indirect Effects of Child Care Subsidies On Young Children's Health and Developmental Outcomes

Purpose: This study investigates the direct and indirect effects of child care subsidies on poor and near-poor children’s health and developmental outcomes. The direct effects of child care subsidies on child development have been recently studied. However, little is known about the indirect effects of child care subsidies on child development transmitted through maternal factors including employment, income, and parenting. Informed by empirical research, this study examines whether child care subsidies will be positively associated with young children’s health status, behavior problems, and cognitive development. The current study also hypothesizes that child care subsidies will be associated with mothers’ employment, income, and parenting, which will be, in turn, associated with their children’s health status, behavior problems, and cognitive development.

Methods: Using longitudinal data from the Fragile Families and Child Wellbeing Study, factors related to urban families with low income (N=2179) and their children born between 1998 and 2000 were analyzed. The data are drawn from mothers’ three-year follow-up survey (Time 3) and three-year and five-year in-home study (Home 3 and 5). Included in the model were mother-reported data regarding child care subsidies in Time 3; maternal employment status in Time 3; family income in Time 3; mothers’ parenting in Home 3; their parenting stress in Home 3; children’s health status, behavior problems, and cognitive development in Home 3 and 5. For missing responses, this study used maximum likelihood estimation. To test the hypotheses, structural equation modeling was used.

Results: The final model indicates that child care subsidies are significantly but indirectly related to the children’s health status, behavior problems, and cognitive development transmitted through mothers’ employment, income, and parenting. It is worthy of note that mothers who received child care subsidies are more likely to be employed and have higher income. Maternal employment and higher income are associated with mothers’ more adequate parenting and lower parenting stress, which are, in turn, associated with children’s better health status, fewer behavior problems, and higher cognitive development. Regarding total effects, mothers’ parenting, parenting stress, and income are the most influential predictors of children's behavioral problems and cognitive development. Child care subsidies are also found to have moderate but significant influences on children’s outcomes.

Implications: These results suggest that current policy and child care assistance programs (e.g., the Child Care Development Fund) to assist low-income families in obtaining child care and promote employment among disadvantaged mothers with children should be encouraged. It is noteworthy to emphasize that child care subsidies are found to be beneficial to the mothers and, through the mothers, to the children. Findings also suggest that child care subsidies are beneficial to improve mothers’ parenting adequacy and alleviate their parenting stress transmitted through increasing employment opportunities and family income. Policy and program interventions, therefore, should focus on promoting economic well-being in disadvantaged families with children. Funding for child care research, demonstration, and evaluation activities also needs to be increased.