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The U.S. Child Care Crisis: Facts, Causes, and Policies

So Kubota ()

No 2008, Working Papers from Waseda University, Faculty of Political Science and Economics

Abstract: Why does the United States lack affordable child care? I examine the long-term trend of the child care market and document a sharp price increase since the late 1990s. I show that a massive expansion of federal and state means-tested child care subsidies, which were intended to stimulate the market, instead crowded out child care supply. The evidence suggests that the subsidies discouraged home-based child care suppliers who were also working mothers. A simple calibrated equilibrium model captures the rising price, which eventually caused the female employment rate to decline. An effective policy should capitalize on the home-based care business.

Keywords: Child care market; Female labor supply; Child care subsidies (search for similar items in EconPapers)
JEL-codes: H24 J13 J21 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2020-07
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