CORRELATES AND COSTS OF CHILDCARE ARRANGEMENTS FOLLOWING A FIRST BIRTH
Alyssa Browne
A thesis submitted to the faculty at the University of North Carolina at Chapel Hill in partial fulfillment of the requirements for the degree of Master of Art in the Department of Sociology in
the College of Arts and Sciences.
Chapel Hill 2018
Approved by:
Lisa Pearce
Ted Mouw
ABSTRACT
Alyssa Browne: Correlates and Costs of Childcare Arrangements Following a First Birth (Under the direction of Lisa Pearce)
This paper provides analysis of the correlates and relative costs of different childcare
arrangements among families of women who experience their first birth (the transition to
parenthood). I use data from the 2001, 2004, and 2008 Surveys of Income and Program
Participation (SIPP) to analyze the sociodemographic correlates of using different childcare
arrangements (majority parental, majority relative, majority formal, and mixed). I also examine
the relative costs associated with these different childcare arrangements. Multinomial logistic
regression suggests that mother’s pre-birth employment and earnings, household structure, and
the receipt of government subsidies are associated with childcare decisions following a first
birth. Results of first difference analysis suggest changes in net family income following a first
TABLE OF CONTENTS
LIST OF TABLES...….……...……….……….……….…vi
LIST OF ABBREVIATIONS………...……vii
INTRODUCTION.………..1
PREVIOUS LITERATURE………4
The Predictors of Childcare Arrangements.………...4
Human Capital and Socioeconomic Resources.………..4
Family Structure ………..5
Receipt of government assistance ………...6
Maternal Characteristics.……….7
Income Level ..………8
The Costs of Childcare.……….……….………...9
Parental Care.……….10
Formal Care.………..11
Relative Care..………...….12
Mixed Care..………...14
DATA AND METHODS..………....15
Data .………..15
Income..………..16
Research Question 1: The predictors of childcare arrangements ………..17
Dependent Variable ………..17
Independent Variables ………..17
Research Question 2: The household cost of childcare ………19
Dependent Variable ………..19
Independent Variable ………19
Covariates ……….20
Models ………..20
RESULTS ……….23
Descriptive Characteristics .………..23
Changes in Employment, Earnings, and Childcare Costs by Primary Arrangement………24
Multinomial Logistic Regressions of Childcare Arrangements Following a First Birth ………..26
Comparing non-parental arrangements to parental care ………...26
Comparing relative care and mixed care to formal care..………..30
First Difference Model of Childcare Cost by Childcare Arrangement ……….31
CONCLUSION ……….35
TABLES AND FIGURES ………39
LIST OF TABLES
Table 1 - Sociodemographic Characteristics of Mothers Experiencing the
Transition to Parenthood, Means and Proportions (SIPP 2001, 2004, and 2008) ………39
Table 2 - Transition Matrix of Changes in Mothers' Employment between
T1 and T2, among Mothers Experiencing a Transition to Parenthood (TTP) ………..41
Table 3 - Mean Hours Worked, Monthly Earnings, and Childcare Costs Pre-and Post-First Birth, by Primary Childcare Arrangement Adopted
(SIPP 2001, 2004, and 2008) ………42
Table 4a - Multinomial Logistic Regression Coefficients of Childcare Arrangements (Ref = Parental Care) Following First Birth
(SIPP 2001, 2004, and 2008) ………43
Table 4b - Multinomial Logistic Regression Coefficients of Childcare Arrangements (Ref = Formal Care) Following First Birth
(SIPP 2001, 2004, and 2008) ………46
Table 5 - Family Disposable Income (logged) Following First Birth
LIST OF ABBREVIATIONS
CPI Consumer Price Index
SIPP Survey of Income and Program Participation
INTRODUCTION
The transition to parenthood – beginning during pregnancy and extending into the early
childrearing years (Cowan and Cowan 1995) – is celebrated as a milestone in the United States.
At the same time, it demands significant adjustments of first time parents (George 1993) and
comes at a substantial financial cost (Bird 1997; Brandrup and Mance 2011; Stanczyk 2016).
With parenthood comes changes across many dimensions, including labor force participation,
income, health, and marital quality (Lu, Wang, and Han 2017; Myrskylä and Margolis 2014;
Stanczyk 2016). Furthermore, current workplace and social policies in the U.S. are at odds with
the interests of men, women, and their children (Gornick, Meyers, and Wright 2009). The U.S.
does not mandate family leave and only 14 percent of U.S. working adults had access to any paid
family leave in 2016 (Perez and Groshen 2016). Access to family leave in the U.S. is stratified; it
is more accessible to those in high-paid professional occupations than to low-wage workers, 94
percent of whom lacked access to paid leave in 2016 (Perez and Groshen 2016).
Additionally, day care for children is only universally available to parents when their
child enters kindergarten at age five (Damaske 2011). Without subsidized childcare or universal
preschool for younger children, childcare in the U.S. is prohibitively costly, especially for
working class and poor families. One year of full-time center-based childcare for one infant
demands on average 52 percent of a poor single parent’s income and 29 percent of an average
dual-earner family’s income, far surpassing the U.S. Department of Health and Human Services’
definition of affordable childcare, which should not exceed seven percent of family income
is critical to understand how U.S. families navigate the tension between work and the
accompanying need for childcare, and at what cost.
Parents may adopt a wide range of childcare strategies, including parental care, formal
care, relative/informal care, or a combination of arrangements. Most U.S. mothers take time off
from work following a birth (Laughlin 2011) even while most lack paid maternity leave (Perez
and Groshen 2016), meaning that income from mothers’ earnings tends to decline following a
birth (Laughlin 2011). This loss in income can be understood as the consequence of a
non-negotiable need for childcare and lack of institutional support in meeting that need. While we
know that, among low-income families, family structure, parents’ education, and personal beliefs
about work and family predict the use of center-based childcare (Huston, Chang, and Gennetian
2002), we do not know whether these patterns hold for higher income families or how they vary
across other types of childcare.
Furthermore, we know that maternal labor force participation increases with access to
subsidized formal childcare (Bainbridge, Meyers, and Waldfogel 2003; Baker, Gruber, and
Milligan 2008) and grandparental childcare (Posadas and Vidal-Fernandez 2013). While the link
between affordable child care and maternal employment is important, childcare in the U.S. tends
not to be affordable. And while some work has looked at the childcare costs incurred by
low-income mothers specifically (Ahn 2012; Baum 2002), little work has situated these mothers
within the broader context of parenthood in the U.S. As a result, we do not know much about the
immediate childcare-related costs incurred by U.S. families and how those costs differentially
impact U.S. families across income levels.
This paper analyzes the sociodemographic correlates and short-term costs of childcare
2008 SIPP panels. The data for this paper are limited to a sample of families of women who
experience their first birth between the first wave and a childcare module and who respond to
questions about childcare arrangements. The empirical analysis responds to two research
questions. First, what socioeconomic factors predict the use of different childcare arrangements
(majority parental, majority relative, majority formal, or mixed arrangements)? Key
characteristics of the mother’s human capital and socioeconomic resources, household structure,
and other maternal characteristics are explored. This analysis expands on prior work that has
only considered low-income mothers and formal center-based childcare by considering a
diversity of childcare arrangements and differences across income groups.
Second, what are the immediate household costs associated with each type of childcare
arrangement and how do they vary by income level? Prior research has found a steep cost
associated with out-of-pocket payments for formal childcare among low-income women (Ahn
2012; Baum 2002). In this part of the analysis, I account for both the cost of paying providers for
childcare and the opportunity cost associated with foregoing wages to provide parental care.
Relying solely on reported out-of-pocket costs of formal arrangements fails to recognize that
PREVIOUS LITERATURE The predictors of childcare arrangements
Human capital and socioeconomic resources
Parents’ childcare needs vary by their human capital and socioeconomic resources,
household structure, and personal characteristics (Huston et al. 2002). Parents with higher human
capital may be more likely to rely on formal care than relative care, perhaps because highly
educated parents emphasize cognitive stimulation that infants receive from a day care
environment (Huston et al. 2002). Additionally, we might expect more highly educated mothers
and mothers who were employed full time prior to their first birth to choose formal care because
it enables their continued employment. Women who are highly educated and working full time
prior to their first birth face a higher opportunity cost associated with staying at home to provide
parental childcare (England, Garcia-Beaulieu, and Ross 2004). Less educated mothers and those
who were earning less prior to their first birth may be more likely to stop working and provide
parental childcare. We would expect this to be the case because the cost of formal childcare is
high relative to the income of low-earning mothers, so the cost of formal care may outweigh the
opportunity cost of wages lost to provide parental care in the short term (Baum 2002).
Additionally, parental care may be a more feasible option for mothers with access to resources
from a spouse or family than for low-income unmarried mothers living without a private safety
net.
In addition to the high opportunity cost of withdrawing from work among highly
employment following a birth. Educational attainment is correlated with subsequent occupational
outcomes. Differences in occupational status impact access to and use of family workplace
policies including flexible working hours (Nilsen, Brannen, and Lewis 2013; Perez and Groshen
2016) with implications for mothers’ employment trajectories following a birth.
Some evidence suggests that mothers who worked in high occupational status jobs before
birth returned to work more quickly than mothers working in lower status occupations, and that access to family leaves strengthens mothers’ labor force attachment (Grunow and Aisenbrey
2016). Professional, managerial, and public sector jobs are associated with mothers’ labor force
continuity, while mothers in service, sales, clerical, and production occupations are more likely
to reduce or withdraw completely from work (Lu et al. 2017). These occupational differences
reflect the fact that mothers in high status occupations are more likely to have access to paid
maternity leave, for more time and at higher levels of wage replacement than their less
advantaged counterparts (Shepherd-Banigan and Bell 2014). So, while mothers in high
occupational status jobs are less likely to be working two months after birth, this is likely on
account of increased access to paid maternity leave and not a reflection of a loss of income or job
stability (Han et al. 2008).
Family Structure
Family structure is central to childcare decisions, as it both shapes the childcare needs of
parents and the availability of resources for childcare. While mothers who were sole earners or
the breadwinners of their family prior to their first birth may continue to work, we might expect
to see that, education and earnings aside, married mothers are more likely than unmarried
mothers to provide parental childcare. Single and cohabiting mothers demonstrate a stronger
(Percheski 2018). Given this, we might expect that unmarried mothers are more likely than
married mothers to rely on non-parental childcare arrangements in order to enable continued
workforce participation. Unmarried mothers without any co-residing adult household members
may face an increased need for formal childcare in order to enable her own employment, since
she may not have access to any other income.
Co-residence with extended family – in particular, the child’s grandparents – may be
associated with the use of relative care over formal arrangements or parental care for both
unmarried and married mothers (Dunifon, Ziol-Guest, and Kopko 2014; Huston et al. 2002;
Laughlin 2011). Grandparents in the U.S. are increasingly available to provide support and
assistance to their grandchildren. Between 1970 and 2012, the percentage of U.S. children living
with their grandparents doubled from three to six percent (Ellis and Simmons 2014).
Additionally, approximately 20 percent of employed mothers with young children rely on
grandparents as their primary source of childcare (Posadas and Vidal-Fernandez 2013).We
might expect the co-residence of grandparents to be particularly associated with the use of
relative care among lower income families. Private safety nets – including the availability of
childcare help and other forms of assistance – are vital resources that promote poor women’s
employment post-1996 welfare reform (Edin and Kissane 2010; Harknett 2006). They also have
the potential of reducing the burden of high childcare costs associated with formal arrangements
(Whitehurst 2017).
Receipt of government assistance
For lower-income mothers in particular, the receipt of government assistance for
childcare may predict a higher likelihood of using formal care. Childcare that is accessible,
that policies that make childcare more affordable and therefore accessible promotes the use of
such childcare and maternal employment (Ahn 2012; Baker et al. 2008; Blau and Tekin 2007;
Cascio 2006; Forry and Hofferth 2011). The introduction of public kindergarten and universally
accessible, highly subsidized childcare have both been found to have a large positive effect on
the labor force participation of mothers with qualifying children (Baker et al. 2008; Cascio
2006). Furthermore, the receipt of childcare subsidies has been found to be associated with a 13
percentage point increase in the likelihood of maternal employment (Blau and Tekin 2007). It is
worth noting that these papers analyzed interventions that made childcare more affordable to
families, while most childcare in the U.S. far surpasses the threshold for affordability.
Furthermore, there are critical limitations to childcare subsidies in the U.S. since
government-supported childcare benefits have strict income thresholds, so that eligibility for benefits is lost
as income increases. Unfortunately, benefits are often lost at an insufficient income level,
meaning that many low-income families have to negotiate a difficult trade-off to avoid this
“childcare cliff effect” (Roll and East 2014). However, for those who do receive governmental
childcare support, we might expect to see a higher likelihood of using formal childcare than
parental or relative care (Huston et al. 2002).
Maternal characteristics
Other maternal characteristics are worth considering. Some evidence suggests that mother’s race/ethnicity may matter, since mothers’ employment patterns differ by race/ethnicity
following a birth. Among women who were employed prior to a birth, women in racial/ethnic
minority groups maintain more stable labor force participation than White women (Lu et al.
2017). Evidence suggests that Black mothers in general demonstrate the briefest withdrawal
likely to work in government or unionized jobs that offer paid leave at greater rates than other
jobs (Han et al. 2008). As a result of their stronger labor force attachment around childbirth,
women in racial/ethnic minority groups may be more likely to rely on non-parental arrangements
including relative and formal care. We might expect to see this association with relative care
especially, as prior research has documented the tendency of mothers in racial/ethnic minority
groups, in particular Black mothers, to rely on family networks for childcare (Stack 1975; Uttal
1999). However, despite some evidence that Black children tend to enter non-parental care
earlier than White children, findings on race/ethnicity differences in non-parental childcare use
are inconsistent (Huston et al. 2002).
Income Level
Finally, income appears to have a non-linear relationship with female labor force
participation, which may indicate a similarly non-linear relationship in terms of childcare.
Greater family income is associated with a higher likelihood that a mother will withdraw from
the labor-force either fully or partially following a first birth. However, mothers living in poverty
are also more likely to scale back work compared to non-poor mothers (Lu et al. 2017). The
calculations behind decisions to withdraw from work are likely very different for poor mothers
and wealthy mothers. Wealthy mothers have more flexibility to choose to withdraw from the
workforce, as they experience greater economic security and can more securely withstand the
loss of income, while poor mothers may withdraw because they cannot afford the cost of formal
childcare (Lu et al. 2017). In both cases, however, we might expect a higher likelihood of
choosing parental childcare over formal childcare.
We know that low-income parents – in particular single mothers – rely on their family
Harknett 2010). Evidence suggests that single or cohabiting mothers in poverty rely on a
combination of public programs and private forms of support, including assistance from friends,
families, and boyfriends (Kalil and Ryan 2010). Since low-wage mothers tend to have little
flexibility in their schedules and tend to work irregular hours, they may rely on relatives to
provide childcare to accommodate their schedules (Henly 1999) and thus we may expect to see
that unmarried mother families in the lower income groups are more likely to rely on relative
childcare than their married peers.
However, personal disadvantages appear to weaken rather than strengthen perception of
support, especially for help with services like childcare. (Harknett and Hartnett 2011).
Unfortunately, this indicates that the most disadvantaged mothers may be the ones least likely to
seek assistance from relatives with childcare, and thus they may resort to other types of care,
including formal childcare (Ahn 2012). Furthermore, higher-income families may be more likely
to use relative care because grandparents in advantaged families may be more likely to be retired
and/or to have the disposable income and time to provide support to their children’s families.
The Costs of Childcare
The transition to parenthood tends to be a time of financial strain for U.S. families in
general, with losses in income relative to household needs that persist a year following a birth
(Stanczyk 2016). This pattern may be due to a loss of income that occurs when a parent –
typically the mother – withdraws from work to provide childcare, from the high cost of paying
for childcare to enable continued work, or from a combination of reduced income and the cost of
childcare. Of course, there are other substantial expenditures associated with the arrival of an
infant, such as healthcare, clothing, and other supplies for the infant, but childcare is a
Furthermore, childcare costs have become a source of inequality in the U.S., as
low-earning women pay a much higher proportion of their income toward childcare than
higher-income women. As a result, the costs of childcare may outweigh the benefits of childcare, in
particular for low-income families (Damaske 2011; Huston et al. 2002). High childcare costs
lead to difficult choices within families about the use of resources and employment. As
previously discussed, the childcare choices that parents make likely vary by parental resources
and human capital, household structure, and individual characteristics. The costs of these
different arrangements may also vary, and are important to consider.
Parental Care
Although we have witnessed a shift toward higher levels of labor force participation
among women and mothers in the U.S. over the past few decades, the notable exceptions to this
trend are mothers of infants, who continue to withdraw from the labor force in order to provide
care to their infants. Even though previously employed women are likely to continue working
after a birth, about a quarter of them either drop out or scale back their work (Lu et al. 2017).
Childcare for young children is an inflexible need. Affordable childcare is lacking in the U.S.
and childcare costs have been demonstrated to block some mothers from joining the workplace
and cause others to withdraw from work prematurely (Ahn 2012). The high cost and inflexibility
of childcare presents a barrier to mothers’ ability to participate in the work force, since women
take on the majority of unpaid household labor (Baxter, Hewitt, and Haynes 2008; Bianchi et al.
2012). However, since women’s earnings now account for a large share of family income among
married-couple families in the U.S., and tend to be the sole source of income in single-mother
birth may be a critical contributing factor to increased financial hardship or poverty risk among
U.S. families following births.
As a result, while parental care does not require parents to pay a caregiver out-of-pocket,
there is an opportunity cost associated with a parent providing childcare. Among mothers who
stay home to provide childcare, the loss of their pre-parenthood wages represent the opportunity
cost of using parental care (England et al. 2004). The birth of a mother’s first child is a moment
when the conflict between work and childcare needs first arises and mothers make the largest
adjustments to their employment, resulting in a loss of income. Subsequent births may still incur
a cost, but a much smaller cost relative to a first birth (Lu et al. 2017).
Single mothers are particularly vulnerable to incurring a high cost if they pull back from
employment to care for their child, since they lack a partner’s income to compensate for a
decline in their own earnings (Han et al. 2008; Percheski 2018; Stanczyk 2016). This is
especially true in the post-1996 welfare reform era, since income from government programs like
Transitional Assistance for Needy Families (TANF) are temporary and contingent upon
employment to receive benefits (Gornick et al. 2009). We might expect that parental care is
associated with the highest cost among low-income unmarried mother families compared to
married families and higher income families.
Formal Care
Mothers who continue labor force participation or return quickly to work following a
birth – whether part time or full time – need childcare while they work. Working mothers may
pay for formal childcare, including nannies or day care. While these mothers may lose less
substantial expenditure to incur, reducing the net benefit of maternal labor force participation by
reducing net income (Baum 2002).
The burden of out-of-pocket childcare expenditures among U.S. families
disproportionately affects lower income families (Gornick et al. 2009). Poor mothers paying for
formal childcare spend as much as non-poor mothers, so childcare ends up constituting a larger portion of poor mothers’ monthly budget (Edin and Lein 1997; Whitehurst 2017). Therefore,
even if formal childcare encourages female labor force participation, the costs of full price
formal childcare may place a burden on working women and their families rather than protecting
families from hardship. This may be especially the case among low-income families (Ahn 2014;
Edin and Lein 1997; Whitehurst 2017).
Since the 1996 welfare reform, childcare costs for low-income single mothers increased
by 46 percent on average. Among employed low-income single mothers, post-reform childcare
costs were five times the cost compared to the pre-reform period. Notably, single mothers
without other adults in their household were more likely to pay for childcare than those living
with other adults (Ahn 2012). This indicates that low-income single mothers with other adults in
the household were able to access support in the form of childcare from other household
members, while those without other adults available may be especially vulnerable to financial
strain resulting from childcare needs. Thus, families using formal care incur a cost to enable
continued maternal employment, and there is evidence to suggest that the cost may be largest
among the lowest-earning families.
Relative Care
To mitigate the costs of childcare, some mothers – married or unmarried – may attempt to
networks for childcare support. As of 2013, 20 percent of working mothers with young children
primarily relied on grandparent childcare, as opposed to formal or parental care (Posadas and
Vidal-Fernandez 2013). Other relatives and friends may also provide childcare at a reduced price
or for free. As a result, the receipt of instrumental social support – in this case in the form of
childcare – may promote parental wellbeing (Sarason, B. R, Sarason, I. G, and Pierce, G. R.
1990) by buffering against increased financial costs following a first birth.
In a comparative qualitative study of the transition to motherhood across European
countries, the role of extended family in providing childcare emerged as a theme that spanned
multiple country contexts (Nilsen et al. 2013). While reliance on extended family following
births emerged as a strategy in countries with a strong welfare state like Norway, family was a
particularly critical resource for new parents in countries characterized by high levels of
privatization and cuts in state services. In those countries, family – in particular grandparents –
compensated for the lack of affordable childcare options and inflexibility of childcare needs
among working parents (Nilsen et al. 2013). Given the lack of family leave and affordable
childcare in the U.S. (Perez and Groshen 2016; Whitehurst 2017), we might expect to find
childcare support to be a similarly critical resource in the U.S. by providing a low-cost
alternative to formal childcare.
Evidence suggests that women from disadvantaged backgrounds are more likely to use
grandparent childcare when possible, because it is more affordable than formal childcare
(Posadas and Vidal-Fernandez 2013; Presser 1989). Posadas and Vidal-Fernandez (2013) find that the availability of grandparents to provide childcare increases mothers’ labor force
participation significantly, by nine percentage points, an effect that is especially strong for
As one low-income single mother interviewed by Edin and Lein (1997) articulated, “If I didn’t have Grandma [I couldn’t afford to work].” (1997; p.121). Since the availability of relatives to
provide childcare is associated with a significant reduction in the likelihood that mothers will
drop out of the labor force following a birth (Lu et al. 2017), relative care is likely to be
associated with much lower costs overall. In addition to being inexpensive, relative care
mitigates the loss of income that may otherwise occur through reduction in maternal employment
or complete withdrawal from work. However, while mothers with relatives who help with
childcare are significantly less likely to drop out of employment following a birth, they are still
more likely to scale back to part-time employment. This indicates that while relative care is important, it might not be sufficient to fully protect mothers’ employment (Lu et al. 2017).
Mixed Care
Finally, mixed childcare packages are associated with greater maternal labor force
engagement because informal childcare providers (such as relatives) are able to fill gaps in
formal care and offer a safety net (Brady 2016). Thus, mixed arrangements may be less “costly”
than the other arrangements because they protect labor force participation and reduce costs
associated with majority formal childcare arrangements. In short, they might provide the benefits
and mitigate the costs of all arrangements simultaneously. On the other hand, complex childcare
arrangements may be associated with negative employment outcomes for mothers (De Marco et
DATA AND METHODS Data
This study uses the Survey of Income and Program Participation (SIPP), pooling data
from the 2001, 2004, and 2008 panels. The SIPP is a nationally representative longitudinal
survey of households that is conducted by the U.S. Census Bureau. Each SIPP panel includes
between 9 to 15 waves that are spaced four months apart. In each panel, the sample of
households is split into four rotation groups, with each group interviewed in a different month of
that particular wave. All participants report answers for the four months prior to the interview
month (U.S. Census Bureau 2001). Respondents are asked a set of core questions at each wave,
including questions on labor force participation, income types and amounts, and participation in
a variety of cash and noncash benefit programs. Additionally, SIPP administers topical modules
throughout each panel, including modules covering fertility histories, childcare, child well-being,
and adult well-being. Topical modules are not consistently administered throughout panels,
instead distributed once or twice throughout the panel (U.S. Census Bureau 2001).
This study draws from the core questionnaire and the childcare modules from each panel.
In 2004 and 2008, the SIPP administered two childcare modules: at wave four and wave eight in
2004 and wave five and wave eight in 2008. Only one childcare module was administered during
the 2001 panel, at wave four. Childcare questions were asked about the previous month, which
corresponds with the fourth reference month of the wave. I limit my data set to two months of
observation per household so that I have one month of observation that precedes a first birth and
but childcare modules were only administered at two time points, the pre-birth and post-birth
time point represent a range: for the pre-birth period, from one month to 19 months before the
first birth and from one month to 18 months following the first birth for the second time point.
Having data on both sides of a first birth allows me to observe most clearly how pre-parenthood
characteristics correlate with childcare arrangements, as well as the change in net income
associated with a new need for childcare.
This study uses a sample of families of mothers who experience their first birth during
the SIPP. The family of any mother who already had a child prior to the survey was excluded. If
a mother was younger than 15 or older than 45 at the time of her first birth, her family was also
excluded from my sample. Families with total monthly incomes of zero or negative incomes
were excluded, following in the convention of other researchers using the SIPP, since these
negative incomes are often associated with wealth and are therefore potentially misleading
(Stanczyk 2016). In the end, my first analytic sample includes the families of 1,464 women who
became first time mothers during the 2001, 2004, and 2008 SIPP.
Variables Income
For both analyses, I disaggregate my samples by income tertile. I calculate the income
tertile into which each family falls prior to the first birth, creating three categories: top third,
middle third, and bottom third. I use this measure to understand how the key relationships may
vary by income level. By doing so, I can both see whether certain groups make different
childcare decisions and whether some income groups experience steeper declines in their net
than others. Using 2000 as the base year, I adjusted family income for inflation using the
Consumer Price Index (CPI).
Research Question 1: The predictors of childcare arrangements Dependent Variable
The key outcome of interest for my first research question is the primary childcare
arrangement used following a first birth (time 2). This variable was coded using a set of
questions from the childcare modules that reported who took care of the child (parents,
grandparents, other relatives, non-relatives), what type of childcare was used (relative,
family-based childcare, nanny, daycare center), how many hours a week each childcare arrangement
was used, and the weekly cost of childcare arrangements used. To determine the primary
childcare arrangement used, I calculated the total number of hours a child was reported to be in
childcare and determined the proportion of total hours that the child was in each type of childcare
arrangement. Each family was coded as using “majority parental,” “majority relative,” or “majority formal” when a child spent at least 60 percent of their childcare hours in one of those
three types of childcare. If the child did not spend at least 60 percent of their total hours in one of
those three types of care, families were coded as using “mixed care.” Sensitivity analyses using
80 percent as the cutoff for majority care were run and results remained consistent.
Independent Variables
For my first research question, I include measures of human capital and resources,
household structure, and individual characteristics that are expected to be associated with the
primary type of childcare used. I also include a set of controls that may be related to childcare
intertwined, characteristics that are expected to influence employment status were included (Ahn
2012; Tekin 2005). Each of the key variables is defined below:
Human capital and resources. I include three measures of human capital and resources
in my models. First, I include a categorical variable of the mother’s highest educational
attainment (high school or less, some college, and college or more). Second, I include a
categorical measure of the mother’s employment status prior to her first birth, constructed using
employment status and usual hours worked per week. This variable has three categories: full
time employment, which includes all women who were employed for 35+ hours for all weeks in
the month; part time employment, which refers to those mothers who were employed less than
35 hours per week all month, but who were employed part time all month or full time for part of
the month; and not working, which includes both unemployed mothers and mothers who were
not in the work force. Third, I include a dummy variable indicating whether the mother’s
pre-first birth earned income accounted for at least 50 percent of her family’s earned income. For
married couples, a woman had a value of “1” if her earned income exceeded her spouse’s or if
she was the sole earner in the couple. Unmarried mothers were coded as “1.” This variable
represents the earning power of the mother and the potential opportunity cost of her reducing her
employment post-birth.
Household Structure. I include one categorical measure of household configurations. This
measure has five categories: married household with no grandparents co-residing; married
household with at least one grandparent co-residing; unmarried mother with no other household
adults; unmarried mother with at least one grandparent co-residing; and unmarried mother with
this sample, and may be reflected in the final three categories of this variable, because
cohabitation status is not identifiable across all unmarried adult respondents in the SIPP.
Individual characteristics. Included characteristics are mother’s race/ethnicity
(non-Hispanic White; non-(non-Hispanic Black; (non-Hispanic; and Other, which includes Asian and American
Indian respondents), time since birth (months), and mother’s age at birth.
Other controls. Additional controls include the calendar year and the region of residence,
which includes the Northeast, Midwest, South, and West.
Research Question 2: The household cost of childcare Dependent Variable
My outcome of interest is families’ monthly income, net of the cost of childcare for that
month. This allows me to account for both declines in income that may occur if a parent makes a
work transition to provide some parental care, as well as changes in out-of-pocket expenditures
associated with paying for non-parental childcare. Estimating the total cost of childcare requires
considering both of these components of childcare cost. To calculate the out-of-pocket cost of
childcare, I simply aggregated all reported weekly childcare costs into a total cost variable,
which I multiplied by the number of weeks in that month to arrive at a monthly childcare cost
variable. The cost of parental care is reflected in declines in family income following a first birth,
so is not explicitly calculated. Again, both income and childcare costs are adjusted for inflation
using the CPI.
Independent Variable
For my second research question, my key independent variable is the reported primary
childcare arrangement, which is my outcome of interest in the first part of my analysis, and
independent variable in order to understand how changes in net family income following a first
birth vary by primary childcare arrangement (majority parental, majority relative, majority
formal, or mixed).
Covariates
For my second research question, I control for the same set of sociodemographic
covariates that are included in my models for my first research question. These include mother’s education, mother’s pre-birth employment, household structure, mother’s race/ethnicity, the
receipt of government assistance for childcare, mother’s age at birth, time since birth, and year
and regional dummies.
Models
To respond to my first research question, I estimate multinomial logistic regression
models of the log odds of using each primary childcare type following a first birth, for the
families of mothers experiencing their first birth. Multinomial logistic regression is the ideal
model to address my first research question since my outcome of interest (primary childcare
type) is a categorical variable with more than two categories. For both models, my reference
category is parental care. Therefore, the coefficients for each independent variable represent the
increase or decrease of the log odds of falling into that category of childcare in relation to the
omitted childcare category, parental childcare. To look at differences by income level, I
disaggregate my samples by family income category (bottom two-thirds and top one-third of
families) prior to the first birth and run the models for each group. I then run Chow tests to test
for statistically significant differences in the coefficients across sub-groups. As a second step, I
rotate my reference group in order to focus on non-parental arrangements. I set majority formal
me to compare each non-parental arrangement to parental care, this second step allows me to
directly compare correlates of relative and mixed care with formal care.
To answer my second research question, I use a longitudinal first-difference approach.
First-difference analysis is statistically very similar to fixed-effects pooled time-series models,
with the defining feature being that the first-difference approach only draws from two time points. The first difference equation assumes that data are available on a continuous outcome 𝑌𝑖𝑡
at two time periods (T1 and T2) and that some event 𝑥𝑖 occurs between T1 and T2. The basic
first-difference model is:
(𝑌𝑖2− 𝑌𝑖1) = (𝜇2− 𝜇1) + 𝛽(𝑥𝑖2− 𝑥𝑖1) + (𝑒𝑖2− 𝑒𝑖1)
In my analysis, 𝑌𝑖𝑡 is the total monthly family income net the cost of childcare and 𝑥𝑖 is
the first birth conditional on childcare type. In my analysis, I am interested in the introduction of
point (T1) occurs one to 18 months prior to the event of the first birth and my second time point
(T2) falls within the first 18 months after the first birth. As the family transition –first birth –
occurs in between the two time points, this represents an application of first-difference analysis
that is often used in studies of life transitions (Allison 2009; Johnson 2005). As a second step in
the analysis for my second question, I run split models disaggregated by income ranking at the
first time period, in order to observe how the associations between childcare type and percentage
of household income spent on childcare may differ by income level.
The first-difference model is confined to within-individual variation, so it does not
attempt to draw conclusions between individuals or groups (Johnson 2005). This approach is
similar to the approach used in a recent analysis of changes in parental happiness around the
transition to parenthood in Germany and Britain (Myrskylä and Margolis 2014). A
on outcomes, making it the model of choice for family researchers. For example, this approach is
able to yield unbiased estimates of the effects of transitions, even in the presence of omitted
variables and measurement error (Johnson 2005). Furthermore, this approach allows me to
control for time-invariant unobserved characteristics that may have their own independent
relationship with my explanatory and outcome variables (Johnson 2005:200). These may include
RESULTS Descriptive Characteristics
Table 1provides characteristics of the sample following their first births. The mean
earned monthly income of mothers who had their first birth was approximately $1,900, about 80
percent of the mean monthly income of their spouses, at $2,400. On average, mothers who had
their first birth were working 24 hours per week. The mean monthly out-of-pocket cost of
childcare was $144, although it is worth noting that a substantial proportion of parents (69
percent) report no out-of-pocket cost for childcare. On the other hand, 11 percent of the sample
reports monthly childcare costs above $500. One third of the sample (33 percent) reported that
they had a high school degree or below, while 28 percent had some college education and 38
percent had a college degree or higher.
The vast majority of mothers were married, about 70 percent. A small minority of
mothers – three percent – reported that they were married and had co-residing grandparents in
their household. Only six percent of mothers were single and living in a household without any
other adults, meaning that the majority of the 31 percent of mothers who were unmarried
co-resided with other adults. In 17 percent of families, unmarried mothers co-co-resided with their child’s grandparents, and nine percent of mothers were unmarried and living with other adults
who were not their child’s grandparents. Some of these mothers may have been cohabiting with a
romantic partner. Sixty-three percent of mothers reported having a spouse who worked full-time
and only four percent reported that they had a non-working spouse. The vast majority of married
The sample was 68 percent White, 12 percent Black, 13 percent Hispanic, and eight
percent Asian or American Indian. The mean age at birth for mothers was 26 years old, on par
with the national average. The mean time since first birth, or the age of the infant, was nine
months. Finally, about 20 percent of the sample was drawn from the 2001 SIPP panel, and the
remaining 80 percent were equally split between the 2004 and 2008 panels.
Table 2 is a transition matrix demonstrating changes in mothers’ employment from
before to after a first birth. Among those who were working full time prior to having their first
birth (just over half the sample), 61 percent were still working full time following their first birth,
16 percent had reduced to part time work, and 22 percent had dropped out of the labor force
completely following birth. Interestingly, among the 16 percent of mothers who were working
part time prior to their first birth, 20 percent reported that they increased their employment
following their first birth, while another 38 percent maintained their part-time status. 40 percent
of mothers who were employed part time prior to the first birth dropped out completely. Finally,
of the 31 percent of mothers who were not working prior to their first birth, 22 percent of them
increased their employment to either part time or full time work. The remaining 78 percent
remained out of the labor market. As a result, following their first birth 40 percent of mothers
reported working full time, 20 percent reported working part time, and another 40 percent
reported that they were not working. Notably, there was a lot of mobility between employment
statuses, with a high proportion of women decreasing or increasing their labor force
participation.
Changes in Employment, Earnings, and Childcare Costs by Primary Arrangement
Table 3 lays out several employment and childcare related outcomes by the type of
would adopt parental care following their first birth was only $1,293 per month, the lowest mean
income across childcare arrangements at this time point, and far below the mean income of their
spouses, which was $2,425 per month prior to birth. Across all other childcare categories, the
mean incomes of mothers and their spouses were much more equal. The second lowest income
was among mothers who would adopt relative care, at approximately $1,359 per month. Notably,
the pre-birth mean income of mothers who adopted a majority formal care arrangement was just
over $2,400 per month, which far surpassed the pre-birth mean incomes of mothers who adopted
any of the other three arrangements. The same holds true for spouses’ earning and for total
family income: those families that would adopt formal care after their first birth had the highest
mean monthly income prior to the birth.
Following a first birth, mothers’ mean income dropped by nearly $650 per month among
those who used parental care and by about $150 per month among those using relative care. The
earned incomes of mothers using formal care and mixed care actually increased on average, by
about $68 and $7 dollars per month, respectively. Across all categories, spouses’ mean income
increased. Among families primarily using parental care, despite increases in spouses’ mean
income, total family income declined by about $470 per month on average. Among families
using relative care, formal care, or mixed care, mean family income increased.
Once we adjust mean family income to account for childcare costs, another pattern
emerges, with declines in net family income across all categories except majority relative care.
For families who adopted a majority formal care or mixed care arrangement, this seems to be on
account of higher childcare costs incurred, resulting in average net losses of $245 and $150 per
month, respectively. For those who rely on a majority parental care arrangement, losses in
saving on out-of-pocket childcare expenses. In contrast, families who rely on majority relative
care, who on average incur a monthly cost of $43, experience an increase in net income on
average ($77). In short, these descriptive findings demonstrate how changes in income and expenditures following a first birth may impact families’ economic situation.
Multinomial Logistic Regressions of Childcare Arrangements Following a First Birth Comparing non-parental arrangements to parental care
The multinomial regression results bring to light several factors associated with post-birth
childcare arrangements (see Table 4a), for the full sample and sub-samples disaggregated by
pre-birth household income tertile. We see some variation by the human capital and resources
measures. With majority parental care as the reference group, women with a college degree or
more are more likely to use majority formal care than the least educated mothers, while women
with some college are more likely to use mixed care compared to the least educated women.
When we disaggregate by household income, women in the top third of families who have some
college education are more likely to use formal care than the least educated women in the same
high income group. This coefficient is statistically different from the lower income families.
There were no educational variations in the likelihood of relying on relative care.
There are some noteworthy differences by pre-birth maternal employment. Families
where mothers were engaged in the labor market prior to their first birth were much more likely
to use any non-parental care arrangement than parental care. Among the full sample, families
where mothers were engaged in part-time employment were more likely to use majority relative,
majority formal, or mixed childcare arrangements. In regards to formal care, lower income
use formal care than parental care. This association did not hold for higher income families, and
the differences between income groups were statistically significant.
Among the full sample and across both income groupings, families where the mothers
were employed full time prior to their first birth were significantly more likely to choose
majority relative, majority formal, or mixed childcare arrangements compared to parental care.
Across all non-parental arrangements, the log odds were similar for lower income and higher
income families, with no statistical difference. This highlights a consistent positive association between women’s pre-first birth full time employment and the use of non-parental care post-first
birth.
Mothers’ pre-first birth earnings also matter. Among the full sample of mothers, families
where mother’s income accounted for more than 50 percent of their family’s earned income were
more likely to use relative care or formal care than parental care. There was a strong positive
association between high relative earnings and the likelihood of using formal care for women in
the top third of families, an association that is significantly different from women in the lower
income families. This may point to the particular opportunity cost of losing a high income, and
the incentive to thus rely on a childcare arrangement that enables employment. Also, the highest
earners may be best able to afford formal care and may prefer sending their child to a formal
daycare over other options.
There is some variation by household structure. With parental care as the reference
group, unmarried mothers living alone were more likely to rely on relative care or formal care
compared to families with married parents. Unmarried mother families with co-residing
grandparent(s) were much more likely to use relative care than married families with no
likely to choose relative care over parental care. This indicates that the availability of
grandparents does matter, conditional on marital status. Grandparents seem to provide a valuable
service to mothers who are unmarried by pitching in on childcare, but do not appear to fulfill this
role to the same extent in families with married parents. Unmarried mother families living with
household adults other than grandparents were less likely to use formal care than parental care.
There are no differences in the association between household structure and the likelihood of
using relative or formal care by income level.
In regards to the association between household structure and mixed childcare
arrangements, there are some differences by income level. High-income unmarried mothers are
much more likely to use mixed care than high-income families with married parents. This is true
for unmarried mothers who are living alone, residing with their child’s grandparent(s), or
co-residing with other adults. There is no association between families of low-income mothers
living alone or co-residing with their child’s grandparents and mixed care. Additionally,
low-income mothers co-residing with other adults are less likely to use mixed care than parental care
compared to low-income married mothers. These coefficients differ statistically by income
group. This indicates that high income married mothers are more likely to stay home to provide
childcare compared to their unmarried peers.
Receiving government subsidies for childcare appears to make a difference in childcare
choices. Among the full sample of families and within the bottom two income groups,
government subsidies seemed to promote the use of formal care and mixed care. Families who
received government childcare aid were significantly more likely to use formal and mixed care
than parental care, consistent with prior findings (Bainbridge et al. 2003; Baker et al. 2008;
Non-Hispanic Black mothers were more likely than White mothers to be using formal
care compared to parental care. This supports previous findings that Black mothers show greater
labor force continuity following a birth than White mothers (Lu et al. 2017). Hispanic mothers,
on the other hand, were less likely to use mixed care than parental care compared to White
mothers. Additionally, there were significant differences by income level in the association
between mother’s race and the likelihood of using mixed care. Hispanic mothers in
higher-income families were much less likely than higher-higher-income White mothers to use mixed care over
parental care. Asian and American Indian families were less likely to rely on formal care or
mixed care than White mothers. While there appears to be a particularly large negative
association among higher-income mothers in this group, that is likely due to a small cell size
(n=48). There was no variation by race in regards to using relative care.
Higher age at birth among the bottom two income groups was associated with lower odds
of using non-parental childcare than parental care. These results are consistent with Lu et. al
(2017), who found that higher maternity age was associated with a greater likelihood to
withdraw from work or reduce to part-time work. It is important to note, however, that there was
no statistical difference between lower-income and higher-income families in the effect of age at
birth.
In terms of other covariates, there was some variation by calendar year and region. Most
notably, families in the bottom two income groups were less likely to use formal care or relative
care than parental care in 2010, associations that differed significantly from higher-income
families for that year. It is possible that in the context of the economic crisis, parental care
became a more feasible option for these families, especially if there was an unemployed parent in
relative care compared to families in the Northeast. Families in the South were more likely to use
formal care than parental care. There were no statistical differences by income level.
Comparing relative care and mixed care to formal care
Table 4b rotates the reference group and provides a comparison of non-parental
arrangements, with majority formal care as the reference. Among the full sample, we see that the
highest educated mothers and mothers who were working full time prior to their first birth were
less likely to use relative care than formal care compared to the least educated mothers and those
who were not working, respectively. Additionally, mothers in higher-income families whose
pre-first birth earnings accounted for more than 50 percent of family income were significantly less
likely to rely on relative or mixed care than formal care. Taken together, it appears that mothers
with high human capital favor and are able to achieve majority formal care over other
non-parental childcare arrangements, consistent with expectations.
When we consider household structure, unmarried mothers co-residing with
grandparent(s) or other adults are more likely to rely on relative care than formal care. This is
true for the full sample of women, and for lower-income unmarried mothers co-residing with
grandparent(s). Again, this highlights the role of relative care as a low-cost alternative to formal
care when relatives are available. In regards to mixed care, lower-income unmarried mothers
living alone are less likely than their married peers to use mixed care than formal care, while
higher-income unmarried mothers living alone are more likely to use mixed care than formal
care compared to their married peers. Additionally, higher-income unmarried mothers living
with other adults are much more likely to rely on mixed care than formal care. One possible
arrangements and family policies that may better enable them to mix formal care and parental
care compared to lower-income unmarried mothers.
Predictably, the receipt of government assistance for childcare is associated with a lower
likelihood of using relative care than formal care. There is no association between government
assistance and mixed care, likely because mixed care often also involves formal care
arrangements.
There is no variation in the likelihood of using relative or mixed care over formal care by
race among the full sample. Lower-income Black mothers are less likely to use relative care than
formal care compared to low-income White mothers. This is consistent with the first multinomial
model, which found a higher likelihood of using formal care among families of Black mothers,
but it does contradict previous assumptions about the predominant role of relative childcare
among Black families. Among the non-parental care arrangements, there are no statistical variations by mother’s age. However, time since birth does matter. The longer it has been since
birth, the less likely families are to rely on relative care compared to formal care. The magnitude
of this association differs by income level, with a stronger negative association among the
higher-income families than the low-income families. Both groups may rely on relative care
early on, especially in the first few months when their infant is too young for most daycare
centers, but it appears that they tend to transition to formal care as their child gets older. It is
possible that lower-income mothers may make this transition more slowly, relying on relatives
for longer in order to save on childcare costs.
First Difference Model of Family Income net of Childcare Costs
Table 5 shows the results of the first difference models, for the full sample and by family
The base model looks at the association between each type of childcare and the net family
income without controlling for any other characteristics while the final model includes the full
set of covariates.
When we consider the base model for the full sample, both majority formal and majority
parental care are associated with declines in logged net family income of 7-8 percent following a
first birth. While the magnitude of the associations is similar, the mechanisms at play may be
different, with loss of earned income likely contributing to the decline associated with parental
care and the cost of childcare contributing to the decline associated with formal care. There is no
statistically significant association between majority relative or mixed childcare and income.
When we look at the magnitude of the base model effects across income levels, some
interesting trends merge. Parental care is associated with the largest decline among the top
earning families (31 percent), followed by the middle-income group (12 percent). This implies
that the opportunity cost of withdrawing from or reducing work is largest for the most
advantaged mothers, probably on account of their higher earnings. This is consistent with
findings by England and colleagues when they consider the long-term costs of motherhood by
income level (England et al. 2016). This may be the same case for mixed care, since mixed care
often includes some parental care. The highest earning families using mixed care experience an
average decline in net income of about 23 percent.
Both majority relative and majority formal care are also associated with declines in net
income among the highest earners in the base model (17 and 15 percent, respectively). In
contrast, the direction of association between childcare arrangements and net family income is
the opposite among the bottom earners. Regardless of childcare arrangement chosen, lower
from 18 to 34 percent. This could reflect the necessity of maintaining income among low-income
families compared to higher earners, who may have more savings and resources to enable partial
or complete withdrawal from the workforce following a first birth. However, the mechanisms
behind these divergent associations cannot be determined from this analysis.
In the final model, after controlling for household configurations, maternal age, and year
and region the magnitude of the effects of childcare on net family income increases across the
board, although there are no longer any significant associations between childcare arrangements
and net family income.
When we consider the covariates, however, household configurations are strongly
correlated with net family income. Specifically, co-residing grandparents are protective of family
income for married families, among the full sample and across all income groups, compared to
married families without co-residing grandparents. Co-residing grandparents in unmarried
households are also protective of income for the middle and top earners. Among married parent
families, the magnitude of this association is largest for the bottom third earning families, while
it is highest among the top earners among unmarried mother families. Since grandparents’
incomes are not included in the dependent variable, this positive association is not simply the
result of another income earner in the household. Instead, this buffering effect may be because
co-residential grandparents can provide cash gifts or loans to their children’s families, as well as
low-cost relative care, mitigating the out-of-pocket cost of childcare. In contrast, unmarried
households without or with any other adults are both associated with net declines in family
income on average. While these declines may seem intuitive, they must be interpreted with
caution. Because SIPP does not systematically identify cohabiting couples within households,
whether the decline associated with unmarried mother households with other co-residing adults
is accurate. Some of those mothers may pool income or share costs with their cohabiting partner,
CONCLUSION
This study builds on previous work on childcare use among low-income women in the
U.S. by analyzing childcare choices made by U.S. families across the economic spectrum.
Additionally, whereas other work has considered one type of childcare, this study examines how
the costs of several types of childcare arrangements may differentially impact family income.
I find that mothers’ human capital and socioeconomic resources, household structure, and
the receipt of government subsidies shape childcare decisions. Mothers who were employed
prior to their first birth are more likely to use non-parental childcare arrangements, especially
mothers who were employed full time prior to their first birth. Mothers with high educational
attainment are also more likely to choose formal care than relative care, especially mothers in
higher-income families. This may reflect the preferences of these mothers for formal care
arrangements, but it may also reflect greater access to formal care options than mothers with less
resources. Additionally, I find that unmarried mothers are more likely to use relative care than
parental care, especially if they live with their child’s grandparents. This demonstrates the
potential for extended family networks to mitigate the high costs associated with parenthood,
possibly by reducing the out-of-pocket cost associated with formal childcare or by protecting mothers’ employment. Finally, echoing earlier findings, receiving government subsidies is
associated with increased likelihood of using formal or mixed childcare arrangements among
lower earning families, indicating that these families choose formal care when they can afford to.
and accessible to U.S. parents, as formal childcare currently demands a disproportionately high
percentage of lower-income families’ income.
Using first difference analysis, I find that changes in net family income vary across
income groups and types of childcare used. Top earning parents seem to experience net declines
in their income following a first birth, regardless of childcare arrangement, while the lowest
earners seem to have higher net income following a first birth across childcare types. While this
may seem counterintuitive, it may indicate that top earners have more flexibility and can more
readily forego income or absorb the cost of an expensive childcare center while the lowest
earners may need to increase income-generating activities to get by. Unfortunately, these
potential mechanisms cannot be explored in the current analysis. After controlling for household structure, mother’s characteristics, and time and region of residence, there are no longer
significant associations between most childcare arrangements and costs.
This analysis focuses in on the first year and a half following a first birth, so it is
important to recall that the costs reported here are limited to only the short term costs incurred by
parents who have recently had their first birth. If parents have additional children, their childcare
costs may increase, especially if they pay for daycare for multiple children or choose to withdraw
from the workforce with the second birth to provide childcare. A majority of parents with
multiple preschool-aged children choose to use the same type of childcare arrangement and are
more likely to use parental care than parents with one young child (Harris, Raley, and Rindfuss
2002). Furthermore, about 70 percent of this sample relied on majority parental or majority
relative care, but as infants grow older, parents are more likely to “graduate” to formal or relative
care (Han et al. 2008; Harris et al. 2002). As a result, the distribution of childcare and the
