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Child Care. Readings for this topic in Kimmel/Hoffman book: 1) Ch. 1 Blau; 2) Ch 2 Bergmann; Child care topics 1) Why economists study this topic? 2) Affordability 3) Quality 4) Quantity 5) Child care workers. 6) Welfare reform. Child Care: Intro.

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Presentation Transcript
child care
Child Care
  • Readings for this topic in Kimmel/Hoffman book:
    • 1) Ch. 1 Blau;
    • 2) Ch 2 Bergmann;
  • Child care topics
    • 1) Why economists study this topic?
    • 2) Affordability
    • 3) Quality
    • 4) Quantity
    • 5) Child care workers.
    • 6) Welfare reform
child care intro
Child Care: Intro
  • Why economists study this topic?
    • 1) Potential market failure: market fails to work properly, resulting in inefficient outcomes.
      • Imperfect information
      • Externalities
    • 2) Equity
      • Current living standards: child care as a barrier to economic independence for low-income families
      • Children’s future well-being.
  • Affordability details:
    • Very poor face dilemma: must work to support family but cannot afford the childcare.
    • Poor to middle income: Still often cannot afford stable quality care.
affordability concerns
Affordability Concerns
  • Low income workers:
    • ) 1 out of 6 workers (who work at least PT) have Y at or below 2*poverty line.
    • 2) Nearly 70% of working poor families headed by married couple.
  • Lower income workers more likely to use unpaid child care which is less reliable and lower quality.
  • When paying for care:
    • Low Y pay $220/week: 16% of their budgets.
    • High Y pay $320/week: 6% of their budgets.
    • Minimum wage workers can’t afford the low income average payment.
involvement of federal govt in child care
Involvement of Federal Govt in Child Care
  • 1) Government-subsidized employer-provided child care (affects about 4% of workers)
  • 2) Flexible spending accounts:
    • Pre-tax $$ held aside to reimburse child care expenses (up to $5,000 per year)
  • 3) DCTC:
    • Dependent Care Tax Credit: credit for $2400 per kid up to 2 kids.
  • 4)CCDF:
    • Child care and development fund: block grants to states
  • 5) Head Start: never fully funded.
  • States involved in regulation.
child care subsidies
Child Care Subsidies
  • Total federal and state spending:
    • Approximately 10.1 billion dollars.
  • Percent of this money to low income families: about 2/3 of total.
  • Key drawback to DCTC and flexible spending plans: dollars are not refundable so do not benefit lower income workers who incur no tax liability (so fails to affect their ability to purchase quality care).
  • Studies show that subsidizing child care for low Y families has big effect on their employment behavior.
child care availability
Child Care Availability
  • As demand  from  female employment: market did respond with  # providers.
  • Persistent shortages:
    • Low-income neighborhoods
    • Centers willing to accept subsidies (due to reimbursement delays)
    • Infant care (less than 2 years)
    • Off hours care (low income workers more likely to work off-hours).
child care quality
Child Care Quality
  • Factors affecting quality include
    • Child:staff ratio.
    • Staff training and turnover.
    • Child:staff interactions.
    • Physical environment
  • Many studies of child care quality persistently find mediocre to poor quality care and shortages of quality care.
  • Parents do not seem to be able to recognize quality care.
    • Even when informed, often weight factors in wrong way.
blau versus bergmann in kimmel book
Blau versus Bergmann(in Kimmel book)
  • Blau:
    • Child subsidy to replace child care subsidies;
    • Focus on quality and individual choice.
  • Bergmann:
    • Substantial increases in child care subsidies;
    • Direct government involvement in provision of quality of care;
    • Focus on equity (redistributional aspect).
child care workers
Child Care Workers
  • An issue for this class because:
    • 1) nearly 100% of providers are female;
    • 2) provider quality is most important determinant of quality of care.
  • Child care workers:
    • Low paid even when college-educated.
    • Some studies show high turnover (and turnover BIG determinant of quality).
    • Concern: child care not valued by society – viewed as women’s work.
  • Elder care: a growing concern.
child care and welfare reform
Child Care and Welfare Reform
  • Child care $$ is big % of budget for welfare-to-work population.
  • Subsidies play major role in success of welfare-to-work transition.
  • Subsidies have grown under PRWORA.
  • Currently, subsidies being cut due to federal state budget problems and shifting priorities.
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