Barriers to maintaining child care coverage: an analysis of states’ child care subsidy policies

Abstract

Child care subsidies play an important role in stabilizing parental employment and helping low-income families access quality and affordable child care options. However, low-income families on average only maintain subsidies for short periods of time, commonly known as spells. While there are several reasons a family may stop using subsidies, some policymakers and researchers have expressed concerns that program policies may create barriers to subsidy maintenance. With limited federal requirements under the Child Care and Development Block Grant, states have developed divergent policies for their state-based child care subsidy programs. To date, research on child care subsidies has mainly focused on the demographics differences between subsidy recipients and low-income families who do not use subsidies. Very little is known about the effects of states’ policies on whether families’ maintain subsidy coverage. Using data from the Urban Institute’s CCDF Policies Database and the Administration for Children and Families’ CCDF Administrative Dataset this paper analyzes the effects of polices on average spell length and stability of child care spells from October 1, 2007 to September 30, 2010. In particular, the study focuses on policies related to whether families can count job search as an eligibility activity, the length of time between when a family must redetermine its eligibility, and requirements around reporting changes in income. To calculate the effect of policies on subsidy receipt, a difference-in-difference model was run using fixed state and time effects.