Low-Income Families and the Cost of Child Care

Low-Income Families and the Cost of Child Care

State Child Care Subsidies, Out-of-Pocket Expenses and the Cliff Effect
December 23, 2013

Abstract

Child care subsidies provide assistance for low-income families, often to support work activities. Depending on the state of residence, families' out-of-pocket expenses can vary widely, both while receiving the subsidy and at the point when families no longer qualify for assistance. In this paper, we look at how state policies affect families' child care expenses, focusing on the point when families no longer qualify for assistance. We find that when families' incomes increase just enough to make them ineligible for child care assistance, the potential increase in out-of-pocket child care expenses can be much greater than the increase in income.

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