Philip K. Robins

Child-Care Costs and Family Labor Supply

This paper presents a theoretical and empirical analysis of the effects of child care costs on family labor supply and the demand for market child care. The model is a framework for cross-section estimation of the effects of child care costs on labor supply and child care use. It applies to households having young children requiring continuous care and in which both the mother and 1 other potential child care provider are present. The 3 potential sources of child care are the mother the potential informal provider and the market. Using data from the 1980 baseline household survey of the Employment Opportunity Pilot Projects this empirical analysis uses a subsample of 6170 households in which there is a married woman under age 45 with her spouse present at the time of the survey at least 1 child under age 14 and nonmissing data on key variables. Results show that 1) higher market child care costs discourage women from working even when an informal source of care is available indicating that such informal care is an imperfect substitute for market care; 2) a higher wage rate for the mother encourages her to work thus a higher wage rate increases the probability of using market child care; 3) the number of children requiring care has a negative impact on the probability of the women working with the largest impact caused by younger children; 4) nonwage income has a negative impact on the probability of the woman working; and 5) black women are more likely to work than whites and are statistically more likely than whites to use market child care if they do work. This family labor supply model predicts that the cost of market child care will affect household decisions on labor supply and child care use. Estimates of a qualitative choice model provide strong confirmation that child care costs affect such decisions. The responsiveness of the labor supply of mothers to child care costs demonstrated in this study indicate that such subsidies do have their intended effect of encouraging labor supply. The fact that a large proportion of current child care subsidies benefit primarily middle and upper income families via the income tax credit suggests that the labor supply effets of such subsidies may in practice be stronger for less needy families than for low income families. Employer-subsidized child care may become an increasingly popular tool for attracting mothers into the labor force.

Job Search Outcomes for the Employed and Unemployed

This paper examines how four components of the job search process--the choice of search methods, the choice of how many firms to contact, the rate at which offers are received, and the acceptance or rejection of an offer--influence the job-finding rate. A reduced-form model of job search is estimated that takes account of the fact that users of a particular method of job search are not a random subset of all searchers. The empirical analysis focuses on differences in search behavior between the employed and unemployed. A key finding of the analysis is that the offer rate per contact is greater for employed searchers than for unemployed searchers. This may be due to differences in the effectiveness of search while employed versus unemployed or to unobserved differences in search effort. Further research on this issue is needed because many models of job search behavior are based on the assumption that job search is more effective when one is unemployed.

A Structural Model of Labor Supply and Child Care Demand

This paper specifies and estimates a structural model in which the decision to purchase market child care-and the quality purchased-is made simultaneously with the employment decision of the mother. Separate analyses are performed for married mothers and single mothers. The structural estimates are used to simulate the effects and costs of changes in the federal child care tax credit. The simulations indicate that a refundable child care tax credit would distribute child care benefits more equally across the population by increasing the shares of subsidies received by low-income families, and would induce a considerable increase in expenditures on market child care. Labor supply also increases, but by considerably less than child care expenditures. A surprising result is that, despite large increases in child care expenditures, the overall quality of child care does not change very much. The primary beneficiaries of more generous subsidies are current users of high quality free care who are induced to purchase slightly higher-quality market care.

Fertility, employment, and child-care costs.

A sample of labor-market and birth histories is used to estimate the effects of child-care costs on employment and fertility decisions. A reduced-form empirical analysis is performed, which is based on hazard functions for transitions among various fertility-employment states. Higher child-care costs result in a lower birth rate for nonemployed women but not for employed women. Higher child-care costs also lead to an increase in the rate of leaving employment and a reduction in the rate of entering employment. The results suggest that potential behavioral effects of child-care subsidies could be significant and should be taken into account when alternative child-care policies are being debated.

A Comparison of the Labor Supply Findings from the Four Negative Income Tax Experiments

Between 1968 and 1982, the United States federal government sponsored four negative income tax experiments. This paper provides a set of consensus estimates of the labor supply responses to these experiments. It is found that despite the wide range of treatments and evaluation methodologies, the results are remarkably consistent. On average, husbands reduced labor supply by about the equivalent of two weeks of full-time employment. Wives and single female heads reduced labor supply by about the equivalent of three weeks of full-time employment. Youth reduced labor supply by about the equivalent of four weeks of full-time employment. Estimated income and substitution effects are quite similar to those obtained from nonexperimental studies.

A META-ANALYSIS OF GOVERNMENT- SPONSORED TRAINING PROGRAMS

This study uses meta-analysis to synthesize findings from 31 evaluations of 15 voluntary government-funded training programs for the disadvantaged that operated between 1964 and 1998. On average, the earnings effects of the evaluated programs seem to have been largest for women, quite modest for men, and negligible for youths. For men and women, the earnings effects of training appear to have persisted for at least several years after the training was complete. Classroom skills training was apparently effective in increasing earnings, but basic education was not. There is no evidence that more expensive training programs performed better than less expensive ones. Although the United States has more than three decades of experience in running training programs, the programs do not appear to have become more effective over time.

Child care demand and labor supply of young mothers over time.

This paper uses panel data from the National Longitudinal Survey of Youth (NLSY) to analyze jointly fertility, employment, and child care decisions of young women over time. As these young women age (from 21 to 25 years on average) they become increasingly likely to have young children, to be employed, and to use nonrelative forms of child care. A multivariate analysis reveals that rising wage rates and changes in household structure are important determinants of these upward trends. Further analysis reveals a considerable amount of movement each year among states defined by the presence of young children, employment, and child care arrangement. Overall the young women in the NLSY can be characterized as being in a volatile stage of their lives, when many economic and demographic factors are changing. They appear to respond to these changes by altering their labor supply and child care behavior.

Employment and child-care choices in Canada and the United States

In this paper we examine employment and child-care choices of two-parent families with young children in the United States and Canada, using a pooled data set based on recent national surveys in each country. We find that the employment and child-care choices of Canadian families are similar to those of U.S. families. Estimates of a model of employment and child-care choices indicate significant effects of child-care subsidies, child-care prices, and wage rates on employment and child-care choices. However, none of these factors helps to explain the differences in employment and child-care choices between the two countries.

Job search, wage offers, and unemployment insurance☆

Abstract Several previous studies have estimated that unemployment insurance (UI) causes an increase in the duration of unemployment and have concluded from this that UI raises reservation wages. However, job-search theory implies that UI can also affect duration through its impact on job offer arrival rates and/or through an impact on wage offers. In this paper we attempt to identify these possible additional effects using survey data on a sample of unemployed individuals. Like previous studies, we find that UI significantly increases unemployment duration. However, part of this effect is estimated to stem from a decrease in the offer arrival rate as well as from a higher reservation wage.

The Labor-Supply Effects and Costs of Alternative Negative Income Tax Programs

Results from the Seattle and Denver Income Maintenance Experiments are used to predict nationwide labor-supply effects and costs of six alternative negative income tax programs. To make the predictions, a labor-supply model parameterizing the experimental treatments is estimated using experimental data. The parameters of this model are introduced into a microsimulation model called Microanalysis of Transfers to Households (MATH). The simulations employ the March 1975 Current Population Survey (CPS), which is a weighted random sample of the U.S. population. The simulations are performed within a partial equilibrium framework under the assumption that the demand for low-income labor is perfectly elastic. The simulation results indicate that coverage, costs, and labor-supply effects of a national NIT program vary widely with the parameters of the program.