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Earnings and Employment Patterns Following Child-Care Subsidy Receipt

W. Clay Fannin, Colleen Heflin, Taryn Morrissey

Social Service Review, May 2024

Colleen Heflin

Colleen Heflin

Clay Fannin headshot

William Clay Fannin

Employment and earnings instability is common, particularly among low-income families, and can interfere with child-care arrangements. Child-care subsidies are designed to support parents’ labor force participation and earnings, but the subsidy program’s reach is limited, and enrollment may be hindered by changes in parents’ employment or income; in turn, changes in child-care subsidy participation may lead to changes in parents’ employment status, hours, or earnings.

This study uses longitudinal administrative data from 2016 to 2019 on quarterly employment and earnings and child-care subsidy program participation from Virginia to examine associations between household subsidy receipt and parents’ earnings and employment outcomes.

Parental employment and earnings increased in the quarters following initial subsidy receipt, which then became stable. Among working parents, we find increased job and earnings stability in the quarters of subsidy receipt but increased multiple jobholding.

Findings highlight the importance of child-care subsidies for the employment outcomes of low-income families.