Child Care Subsidy Instability and Material Hardship

Background

Child care subsidies aim to promote economic stability and child development by reducing child care costs for low-income families. However, subsidy participation is typically short and intermittent, with premature program exits increasing disruptions in employment and caregiving. A few studies have explored the economic impacts of child care subsidies, but research considering subsidy instability’s link to material hardship is limited. This is despite evidence that income poverty and material hardship are distinct concepts, with the latter encompassing multiple domains of disadvantage that matter for families’ wellbeing. Through a material hardship lens, this study examines how (dis)continuous subsidy use contributes to the risk of material hardship (Research Question 1) and whether informal social support buffers the negative impact of subsidy instability on material hardship risk (Research Question 2).

 

Methods

Data come from a random sample of 612 subsidy clients who were new subsidy program entrants in 2011-2012 and who were interviewed approximately 18 months after program entry. The final sample includes 543 respondents who provided valid hardship and subsidy information. Tests to detect missing data bias are performed. A binary indicator of material hardship measures whether families experience any of seven material hardship items in prior 12 months (being behind in rent, not being able to see a doctor, utility disconnection, running up credit cards, and living in shelter). A trichotomous subsidy instability indicator, based on self-reported continuity of subsidy use in prior 12 months, measures continuous, intermittent, and no subsidy use. Logistic multivariate regressions estimate the risk of material hardship (Research Question 1) and the interaction of subsidy instability and social support (Research Question 2), controlling for family demographic and economic characteristics.

 

Results

Descriptively, in prior 12 months, 65% of respondents reported experiencing at least one and 42% more than type of material hardship; 53% continuously relied on subsidies; 32% percent had used the program intermittently; and 15% had not used the program. As expected, multivariate results show that those with intermittent subsidy use and those with no program use in prior 12 months report elevated risk of any material hardship (odds ratio= 2.07, p<.01; 1.85, p<.05, respectively) compared to those with continuous use. The interaction analysis shows that social support is associated with reduced risk of material hardship particularly for those with intermittent subsidy use.

 

Discussion

To address endogeneity, future research will link survey data to longitudinal subsidy program records to create an administrative measure of instability in the first six months of program use. This measure will not be subject to self-report bias and will capture instability prior to the survey measure of material hardship. Overall, study findings suggest that, at least cross-sectionally, subsidy instability increases the risk of material hardship and that social support can mitigate that risk. Because the risks of material hardship due to subsidy instability are disproportionately felt by those without access to informal support, policy efforts to improve subsidy stability are critical and should have positive distributional effects. Implications of recent policy changes designed to improve subsidy stability will be discussed.