Date of Award
Doctor of Philosophy (PhD)
Patrick L. Warren
Curtis J. Simon
Jorge L. Garcia
William R. Dougan
This dissertation is comprised of three essays on the Child Care Tax Credit program in the United States. I analyze how the Child Care Tax Credit affects the budget constraints faced by mothers, and how changes in mothers' budget constraints affect maternal labor supply. Furthermore, I examine how the Child Care Tax Credit affects children's well-being through mothers' time allocation. Understanding the employment and time allocation adjustment of the women with young children, according to the tax programs and child care subsidies, is important for theoretical and practical reasons. Examining the influence of the tax subsidy on children's cognitive and non-cognitive development can provide important information for policymakers.
In the first chapter, I explore the effects of the Child Care Tax Credit on maternal labor supply. Childbearing is the main factor that affects the labor supply of women. Many studies show that the cost of child care services has a significant impact on the labor supply of women with young children. The Child Care Tax credit (CCTC) is a child care subsidy program that allows working parents to claim a tax credit for their child care expenses. In the study, I document a comprehensive legislative history of the CCTC enactments, amendments, and repeals at both federal and state levels. Using the CCTC variation generated by exogenous law changes and focusing on mothers between the ages of 20 to 55 in the Panel Study of Income Dynamics, I estimate the effects of the CCTC on maternal labor supply. Using differences-in-differences estimation and policy shocks measured at the state level, I found that a \$1000 increase in the CCTC increases the maternal labor force participation rate by three percentage points. To incorporate the policy variation within a state, I construct an individual CCTC treatment variable for each woman using observable individual characteristics and state-specific regulation. I use the state-level CCTC treatment variable as the instrumental variable for the individual CCTC treatment variable and find that a \$1000 increase in CCTC increases the maternal labor force participation rate by six percentage points. The effects are more pronounced in married mothers than single mothers.
In chapter two, I explore the effects of the Child Care Tax Credit on children's long-term educational achievement. Since the CCTC is effective in encouraging mothers to join the labor force, the question that follows is: how would the CCTC affect the well-being of children? Potentially, there are two main channels in which the CCTC affects the well-being of children. The CCTC reduces the cost of child care services and encourages mothers to join the labor market. More family income can help the development of the children; this can be categorized as an income effect. The tax credit also affects the mother's time allocation, and the change of time exposed to child care intensity also affects the development of the child. I document a comprehensive legislative history of the CCTC enactments, amendments, and repeals at both federal and state levels. Using the detailed CCTC legislative variation generated by exogenous law changes and applying the variation on data from the Panel Study of Income Dynamics, I examine the long-term effects of the CCTC policy exposure from early ages on the educational achievement of the child. Results show that CCTC policy exposure from early ages has negative effects on the educational achievement of the child in adulthood.
In chapter three, I explore the relationship between the early ages Child Care Tax Credit policy exposure and children's well-being measured at early ages. Using the detailed CCTC legislative variation generated by exogenous law changes and applying the variation on data from the National Longitudinal Survey of Youth 1979 and the National Longitudinal Survey of Youth 1979 Child and Young Adult, I examine the short-term effects of the early age CCTC policy exposure on the educational achievement and behavioral problems of the child. Results show that early age CCTC policy exposure has negative effects on the reading score of the child, which shows evidence that the mother's time allocation effect dominates the income effect of the tax credit for the marginal population.
Jiang, Haibin, "The Child Care Tax Credit, Maternal Labor Supply, and Children’s Well-being" (2020). All Dissertations. 2668.