Atlantic Philanthropies

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Report: Impact of Child Care Subsidies on Low-Income Single Parents

Child Trends

4 March 2009

In the United States, low-income single parents who receive child care subsidies spend only a little less of their own money on child care than they did before receiving the subsidy, according to this study conducted by Child Trends. Child Trends, a grantee of The Atlantic Philanthropies.

Low-income single parents who receive child care subsidies spend only a little less of their own money on child care than they did before receiving the subsidy, according to a recent study conducted by Child Trends researcher Nicole D. Forry. The study, " The Impact of Child Care Subsidies on Low-Income Single Parents: An Examination of Child Care Expenditures and Family Finances," is published in the March issue of the Journal of Family and Economic Issues.

Among the findings:

  • Parents often switch from informal providers to formal providers when they receive child care subsidies, which helps explain the small impact on their out-of-pocket child care expenses.
  • Although some parents reported being constrained from obtaining higher quality care due to finances, others prioritized high quality care over paying for other services, such as rent and electricity, on time. 

Abstract

Evidence regarding the degree to which child care subsidies support low-income, employed parents’ financial resources is lacking. This study used two samples to evaluate the impact of child care subsidies on parents’ child care payments and the percentage of household income spent on child care. Cross-sectional and longitudinal multivariate models were supplemented with descriptive information on parents’ perceptions of the impacts of child care costs and child care subsidies on family finances. Child care subsidies were found to reduce child care costs by a small but statistically significant amount. Approximately half of parents who received a subsidy reported that it positively affected their financial well-being, allowing them to afford non-child care services, save money, and pay bills or debts.

Tags:
child care, child trends, children, children & youth, families, low-income</