Abstract

Because women typically serve as primary care providers for their children, female labor force participation behavior is likely to be affected significantly by the costs associated with replacing maternal care with nonmaternal care. While some evidence of this phenomenon exists in the economics literature, discrepancies across studies make it difficult to provide conclusive evidence of the employment effects of these child care costs. This paper uses an improved SIPP survey design to present new evidence regarding the degree to which child care prices impede mothers' employment behavior, with additional evidence of the difference in these elasticities across marital status, empirical technique, and equation specification. This permits linking this paper to the existing evidence, drawing the conclusion that child care prices impede mothers' employment behavior significantly, with single mothers exhibiting less responsiveness in their labor force participation behavior to child care price changes than married mothers. Generally, these results support the basic finding of Ribar (1992), reject the smaller price of care elasticities found by Averett et al. (1997), Blau and Robins (1988), Connelly (1992), and Tolin (1992), but replicate the lower elasticities found in these papers by changing equation specifications. Also, significant sensitivity in the price elasticity is revealed, particularly with respect to changes in equation specification.

This content is only available as a PDF.