Child Care Subsidies and Multiple Child Care Arrangements

Purpose. Prior research suggests that low-income, working families often rely on multiple, concurrent child care arrangements in order to manage work and caregiving needs and that this is largely driven by employment and child care market constraints.  By reducing cost constraints and increasing access to care, child care subsidies may reduce low-income families’ need to rely on multiple arrangements, which have been associated with adverse child behavioral outcomes.  Moreover, the generosity and restrictiveness of state subsidy programs may matter.  More generous policies should increase the affordability of care, especially more formal care, and may result in a lower likelihood of using multiple arrangements, whereas restrictive policies that constrain parents’ choices may lead to a greater likelihood.  While research suggests that subsidy use and more generous policies are associated with greater use of center-based care, these studies tend to focus on the child’s primary arrangement and have not considered multiple arrangements. The purpose of this study is to advance knowledge about how subsidies relate to parents’ child care decisions by examining the associations between the generosity and restrictiveness of state-level subsidy policies and the use of multiple arrangements.

Methods. Using a nationally-representative study of children born in the U.S. in 2001, the Early Childhood Longitudinal Study—Birth Cohort, I examine associations between state subsidy policies in FY2000 and the use of multiple arrangements when children are ages 9 months and 2 years (N=8600).  I use difference-in-difference methods, a technique which compares outcomes under different policy treatments and between treatment and comparison groups.  Analyses test whether the generosity and restrictiveness of policies predict multiple arrangements among low-educated, single mothers (“treatment group” that is eligible for subsidies) when compared to low-educated, married mothers.  Provider reimbursement rates and total amount of state subsidy spending are used as measures for generosity.  Restrictiveness is measured based on whether the state places limits on home-based care and exempts relative care arrangements from health and safety regulations.  Multiple arrangements are defined as two or more home-based arrangements (with a relative or non-relative) and as two or more home- and center-based arrangements, and are compared to using a single relative (home-based) arrangement; single non-relative (home-based); single center; and parent care only.  

Results. Results suggest that more generous subsidy policies predict a lower likelihood of using multiple home-based arrangements compared to a single non-relative or single center arrangement, and a greater likelihood of using multiple home- and center-based arrangements compared to a single relative arrangement.  Results also suggest that less restrictive policies predict a greater likelihood of using a single relative arrangement compared to multiple arrangements of either type.  

Implications.  These findings provide new insight into how subsidies shape parental decision-making with regard to both type and number of arrangements.  Overall, more generous and less restrictive subsidy policies may decrease parents’ use of multiple arrangements (particularly multiple home-based arrangements) and, in turn, promote positive child behavioral outcomes.  This knowledge will be useful to policymakers and program administrators for understanding how subsidy policies affect parents’ child care decisions and child well-being.