Why Do They Leave? Child Care Subsidy Use in Oregon

Abstract

Child care subsidy, Cox regression model, Eligibility periods, Employment stability,

Contracts, Vouchers, and Child Care Subsidy Stability: A Preliminary Look at Associations between Subsidy Payment Mechanism and Stability of Subsidy Receipt

“…Meanwhile, policymakers wishing to promote child care stability may consider altering their administrative practices. For example, less frequent recertification of eligibility, or the implementation of grace periods after an income or work change renders families ineligible, could also increase stability for families participating in the child care subsidy system (Adams et al 2007;Grobe et al 2008).…”

“…These studies suggest that subsidies increase maternal employment by 12-33% (Berger and Black 1992;Blau and Tekin 2007;Tekin 2005). Researchers have also begun to explore the dynamics of subsidy use, finding that spells of subsidy receipt are typically short, and that many families experience frequent interruptions in subsidy use (Grobe et al 2008;Meyers et al 2006). Using data from five states, Meyers et al (2006) find that the median length of a subsidy receipt spell is 3-7 months, and that 35-58% of children reenter the subsidy system within a year after a spell ends.…”

“…Using data from five states, Meyers et al (2006) find that the median length of a subsidy receipt spell is 3-7 months, and that 35-58% of children reenter the subsidy system within a year after a spell ends. The most important factor hastening the end of a subsidy spell is the eligibility recertification process in which families must demonstrate that they still meet program participation criteria (Grobe et al 2008). Ha and Meyer (2010) find that few families who leave the child care subsidy system do so because they have found high-paying jobs that disqualify them for subsidies.…”

How Costly is Welfare Stigma? Separating Psychological Costs from Time Costs

“…9 This evidence supports our assumption that the psychological cost of welfare participation increases only in the extensive margin, not the intensive margin. In addition to Keane and Moffitt, other studies have found that participating in one program increases the probability of participating in a second program and that individuals who participate in multiple programs tend to leave all of them simultaneously, even when they are still eligible for benefits (Grobe, Weber, and Davis 2008;Brauner 1999). These two additional empirical findings are consistent with a large cost associated with participation in the first program and lower costs for additional programs, which is captured in our model by the single psychological cost and program-specific time costs.…”

“…For example, if the utility costs of participation are primarily due to time costs, such as paperwork and visits to welfare program offices, policies with the goal of increasing take-up rates among eligibles could focus on streamlining the application and re-certification process. Prior research has found these processes to be costly and burdensome, as evidenced by higher exit rates in the last month of the eligibility period (Grobe, Weber, and Davis 2008) and by surveys of individuals who have exited welfare (Brauner and Zedlewski 1999). However, if the utility costs of participation are primarily due to psychological costs, then take-up rates could be increased by reducing the visibility of welfare participation, such as by using refundable credits in the federal income tax code like the Earned Income Tax Credit (EITC).…”