Academic journal article National Institute Economic Review

Stability and Change in Childcare and Employment: Evidence from the United States

Academic journal article National Institute Economic Review

Stability and Change in Childcare and Employment: Evidence from the United States

Article excerpt

Using a unique data set from the US to examine the association between employment stability and childcare stability, we find that childcare use is fairly stable for current and former welfare recipients. In addition, although childcare instability contributes to employment instability, it does not appear to be the major reason women leave their jobs. In this case, employment retention programmes in the US, while not losing focus on childcare issues, should also address ocher barriers to keeping jobs, such as limited education and lack of work experience.

Keywords: childcare; employment JEL classification: 138, J13

Introduction

A key goal of the US welfare reform legislation of 1996 was to move women out of welfare and into work. (1) Although there is debate about whether welfare reform, the expanding economy, or other factors were the cause, welfare caseloads have fallen dramatically since the mid-1990s, matched by an increase in the number of single mothers in the workforce. While this would seem to be a success, many of the women who left welfare for work have had difficulty staying employed. Studies of women who left welfare in several states found that only about a third of them worked consistently during the subsequent year (Isaacs and Lyon, 2000).

In response to falling caseloads and a new emphasis on self-sufficiency, policymakers have begun focusing on programmes designed to increase employment retention (Bloom et al., 2002a), and the first step in designing these programmes has been to assess why employment is unstable. Former welfare recipients face a range of disadvantages that might easily contribute to job instability, such as limited work experience, low education levels, and the challenges of working and raising children with a limited income. There is some evidence that lack of available childcare hinders women's ability to take jobs (Shumacher and Greenberg, 1999). But is unstable childcare a major reason they leave jobs? The answer has clear implications for the design of employment retention programmes.

Although there is a growing research on the types of childcare used among welfare recipients and low-income women in general, there is less information on childcare stability. The research shows, for example, that many women use informal care by relatives, but there is less information about how often they change types of care from month to month or how often they have interruptions in care. There is also limited evidence on how childcare instability affects employment, in part because of a lack of appropriate data but also because it is difficult to prove that one factor causes the other. Although the same women who have unstable childcare typically have unstable work patterns, this association may arise simply because both of these outcomes are caused by some other factor, such as low education levels or family instability.

Using a unique data set from the US, consisting of over 3,500 women targeted for welfare-to-work programmes in three states, this paper examines childcare stability and its association with employment stability among current and former welfare recipients. Each of the three programmes was evaluated using a random assignment design, in which some women were assigned to the new programme being tested while others were assigned to the then existing welfare system in the state, or Aid to Families with Dependent Children (AFDC). (2)

These data provide several advantages. First, each of the programmes evaluated includes components that are now key elements of many states' new welfare programmes (referred to as Temporary Assistance for Needy Families, or TANF), such as time limits on benefit receipt, work requirements, and financial incentives, used alone or in combination. Focusing on the women in the new programmes allows us to infer patterns of childcare use under the new welfare system. Second, each evaluation includes a follow-up survey with detailed childcare and employment calendars, allowing us to track changes in types of care over time, interruptions in care, and how these changes are related to patterns of employment. …

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