Child-Care Subsidies and the Transition from Welfare to Work

We address how child-care subsidies help in the welfare-to-work transition relative to other factors. We examine how the policy operates, whether childcare problems differ by subsidy receipt, and the effect of subsidy on work. Data are from a random sample panel study of welfare recipients after 1996. Findings show that subsidy receipt reduces costs, but not parenting stress or problems with care. It predicts earnings and work duration net of other factors. Increased use of subsidies by eligible families and greater funding for child care would help meet the demand for this important support for working poor families.