Three Essays on Child Care Policy

Sarah Jiyoon Kwon
2022
This dissertation includes three papers that examine child care policy. The first and second papers examine policy changes that intend to expand child care opportunities and reduce child care costs, while the third paper investigates the role of informal care by grandparents during a child care shock. Child care is essential for families with young children. However, its high cost and a lack of public investment have become barriers for many children to receiving quality care (Chaudry et al.,
more » ... 17) . A large literature has shown that the generosity of programs such as child care subsidies, Head Start, and EITC appear to promote child care participation and maternal labor supply. Yet, some dimensions in the American child care policy landscape have received less attention. Heterogeneity in the effect of a universal child care program is unclear, and whether a tax credit that is specifically designed to reduce the care burden for working parents is effective is less known. Moreover, as the globe goes through one of the worst pandemics in history, how families with young children manage the double burden of work and family is an urgent subject. These are the topics with which my dissertation is concerned. My first paper, "The Squeezed Middle: Effects of Universal Pre-Kindergarten (UPK) on the Use of Center-based Care and Child Care Expenditures," examines how the effects of UPK on center-based early education and care (EEC) enrollment and child care expenditures vary by household income with a focus on middle-income children. I find that UPK effectively promotes the use of center-based EEC, and the effects are larger for low-and middle-income families than for the most affluent families. However, the findings suggest that UPK does not contribute to a reduction in child care expenditures and may even be associated with increased expenditures. 2 Results highlight that UPK offers middle-income children as well as low-income children the opportunity to enter the formal early education and care system. My second paper, "The Effects of the Child and Dependent Care Tax Credit (CDCTC) on Child Care Utilization and Maternal Labor Supply," explores the effects of the CDCTC on child care utilization and maternal labor supply using a simulated instrument (SI) approach. I observe that an increase in CDCTC benefits is associated with a rise in maternal employment for households with children under age 5. Subsample analyses show that CDCTC benefits are associated with an increase in center-based EEC enrollment for unmarried mothers and a rise in maternal employment for low-educated mothers. In light of temporary policy expansions included in the American Rescue Plan of 2021 (e.g., an increase in the maximum expenses that families can claim and the maximum credit percentage), my findings imply that CDCTC expansions can promote early childhood education participation and maternal labor supply. Lastly, the third paper turns attention to informal child care by grandparents. The paper entitled "Grandparents and Parental Labor Supply during the COVID-19 Pandemic" investigates whether and to what extent grandparents can play a buffering role in the labor supply of parents of children from birth through age 5 during the COVID-19 pandemic when nonparental child care options are extremely limited. I find that parents in a three-generational family experienced a smaller reduction in the probability of having worked last week and in hours of work during the pandemic than parents in a two-generational family did. Subsample analyses illustrate that the buffering effects of coresident grandparents against the negative economic impact of the pandemic are more pronounced among single and low-educated parents than their counterparts. These findings underscore the role of grandparents specifically, and the importance of informal care and home-based care in general. 3 Overall, my findings suggest that expanding formal and informal child care options can be one of the policy solutions for families with young children who struggle to find affordable and accessible care and to balance work and family. Policies such as UPK and CDCTC can bring more children to the formal early childhood education and care system while promoting maternal labor supply, especially for children from less affluent families. At the same time, informal and home-based care constitute another essential component in an overarching early childhood education and care system.
doi:10.7916/a3zc-cz44 fatcat:4uuqfhdzvbg7hkbcis6zlsk76a