As Congress considers the future of child-care policy in the U.S., subsidies for young children’s care and education are an important tool under consideration. Substantial evidence indicates that high-quality early care and education (ECE) experiences, facilitated through policies to expand and enhance program offerings, can support both parents’ employment and children’s development over the short and long term.

Still, there is little specific quantitative evidence on how an influx of public money would impact families and the ECE sector. In response, we developed a model of supply and demand for ECE and use it to estimate the impact of expanded ECE subsidies similar to recent congressional proposals.

In a new paper, we model two policy scenarios that would increase federal funding for children ages 0 to 4 years old:

  • a “narrow” expansion of child-care subsidies for all eligible households up to 85% of median income; and
  • a “broad” program including households up to 250% of median income.

In both scenarios, household contributions (copays) start at zero for the poorest households, increase with income, and are capped at or below 7% of income up to the maximum income-eligibility threshold. In both cases, parents must also satisfy an activity requirement to receive subsidies.

We explore a broad set of outcomes: (1) ECE participation by type of setting; (2) costs to households; (3) total costs of care; (4) mothers’ employment; and (5) ECE teacher wages. The sections below describe our findings for each outcome. In each case, we compare the effects of the two scenarios to a baseline using the 2019 tax and child-care policy environment.

Read the full article about early care and education by Jonathan Borowsky, Jessica H. Brown, Elizabeth Davis, Chloe Gibbs, Chris Herbst, Aaron Sojourner, Erdal Tekin, and Matthew Wiswall at Brookings.