Public Schooling for Young Children and Maternal Labor Supply

Abstract

As policy makers have sought to reduce the welfare rolls by increasing labor supply among single mothers, much attention has been given to the possible role of expanded child care subsidies, including direct provision of public preschool. At the same time, public interest in child care subsidies for two-parent households is high; for example, former Vice President Gore not long ago proposed to make high-quality pre-school fully available to every family, for every child, in every community in America (Albert Gore, 1999). In this paper, I use 1980 Census data to estimate the effect of public school enrollment for a woman's five-year-old on measures of labor supply and public assistance receipt. This approach has two advantages. First, I am able to estimate the effect of a large implicit child care subsidy.1 Second, because public kindergarten is universally available to all age-eligible children where it is provided, selection problems related to means-testing do not arise. A difficulty with public school enrollment arises because parents may choose to hold their children back a year or enroll them in private school. I deal with this issue by using five-yearold's quarter of birth (QOB) variables as instruments for public school enrollment status. This strategy works because parents' ability to enroll a child in public kindergarten in the academic year when the child turns five typically depends on the calendar date of the child's birth.2 In most states, children born in the second quarter (April 1-June 30) of 1974 will have been eligible to start kindergarten in the fall of 1979, while children born in the first quarter (January 1March 31) of 1975 generally will not. Eligibility for children born between July 1 and December 31, 1974 depends on the rules where they live.3