Does policy matter? The effect of increasing child care subsidy policy generosity on program outcomes

A dramatic change in the generosity of one state's child care subsidy policy provides an opportunity to study the relationship between subsidy policy generosity and program outcomes. We find positive effects of policy generosity on child care usage and continuity in the program. We also find these outcomes affected by employment characteristics of participating parents. Unstable employment as evidenced by frequent employment losses, job changes, and periods of unemployment, challenge the ability of a parent to remain in a program tightly linked to being employed. Generosity of subsidy policy is positively related to achievement of Child Care and Development Fund program goals of continuity and parental access to care that meets the developmental needs of their child.