Family Expenditures on Child Care

Abstract

This study examines the child care "expenditure share," defined as child care expenses divided by after-tax income. We estimate that the average child under six years of age lives in a family that spends 4.9 percent of after-tax income on child care. However, this conceals wide variation: 63 percent of such children reside in families with no child care expenses and 10 percent are in families where the expenditure share exceeds 16 percent. The proportion of income devoted to child care is typically greater in single-parent than married-couple families but is not systematically related to a constructed measure of socioeconomic status. One reason for this is that disadvantaged families use lower cost modes and pay less per hour for given types of care. The expenditure share would be much less equal without low cost (presumably subsidized) formal care focused on needy families, as well as government tax and transfer policies that redistribute income towards them.

Public Policies and Women's Employment after Childbearing

“…For instance, child care subsidies for middle-or high-income mothers may have smaller effects than CCDF funding, which assists low-income mothers. Similarly, income support policies to married families (such as those in many European countries) may 16 Rosenbaum and Ruhm (2007) provide evidence that child care expenditures, as a share of income, are larger for low-income than high-income families, and that the disparity would increase dramatically if not for the lower employment rates and cheaper sources of child care used by the former. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Simulations are conducted using the full sample estimates from Table 2 and are evaluated holding individual characteristics and state fixed effects constant.…”

Efficient Child Care Subsidies

“…Child care needs Data from the Survey of Income and Program Participation indicates that on average, preschool age children spent 16 hours per week in the care of grandparents and other relatives (Rosenbaum and Ruhm, 2007;Laughlin, 2010). We interpret child care needs as the amount of child care time that can be substituted for paid care.…”

The rising cost of child care in the United States: A reassessment of the evidence

“…I sum hours of work over the primary and, if relevant, secondary job. As others note, it is difficult to determine whether these variables capture the total cost of providing care or the net-of-subsidies (i.e., out-of-pocket) cost, although a reasonable assumption is that the latter is generally reported by parents (Rosenbaum & Ruhm, 2007). All expenditures are reported in constant 2013 dollars.…”

“…In addition, both surveys contain a small number of families with implausibly large child care expenditure shares, some with percentages that exceed 100 percent. As these are likely due to the misreporting of child care expenses or income, I follow Rosenbaum and Ruhm (2007) and cap the expenditure share variable at 50 percent. 9 Given that child care expenditures are reported as weekly amounts and household income as monthly amounts, I align the two by multiplying child care expenditures by 52 (weeks) and dividing by 12 (months).…”