The relationship between child care subsidies and children's cognitive development

Child care subsidies help low-income families pay for child care while parents work or study. Few studies have examined the effects of child care subsidy use on child development, and no studies have done so controlling for prior cognitive skills. We use rich, longitudinal data from the ECLS-B data set to estimate the relationship between child care subsidy use and school readiness, using value-added regression models as well as parametric and non-parametric models with propensity score matching. Compared to a diverse group of subsidy non-recipients in various types of non-parental care as well as parental care only, we find that child care subsidy use during preschool is negatively associated with children's math skills at kindergarten entry. However, sensitivity analysis suggests that these findings could be easily overturned if unobserved factors affect selection into subsidy receipt.

► We estimate the relationship between child care subsidy use and school readiness.
► We use propensity score matching and value-added regression with ECLS-B data.
► Subsidy use in preschool is negatively associated with math outcomes.
► However, unobserved factors affecting subsidy receipt could overturn the findings.