The authors evaluate the effects of home inputs
on children’s cognitive development using the sample of
single mothers from the National Longitudinal Survey of Youth
(NLSY). Important selection problems arise when trying to assess
the impact of maternal time and income on children’s development.
To deal with this, they exploit the (plausibly) exogenous variation
in employment and child care use by single mothers generated by
differences in welfare regulations across states and over time.
In particular, the 1996 welfare reform act along with earlier
state policy changes adopted under federal waivers, generated
substantial increases in work and child care use. Thus, the authors
construct a comprehensive set of welfare policy variables at individual
and state levels and use them as instruments to estimate child
cognitive ability production functions. They use local demand
conditions as instruments as well.
The results indicate that the effect of child care
use is negative, significant, and rather sizeable. In particular,
an additional year of child care use is associated with a reduction
of 2.8 percent (.15 standard deviations) in child test scores.
But this general finding masks important differences across types
of child care, children’s ages, and maternal education.
Indeed, only informal care used after the first year leads to
significant reductions in child achievement. Formal care (i.e.,
center-based care and preschool) does not have any adverse effect
on cognitive outcomes. In fact, these estimates imply that formal
care has large positive effects on cognitive outcomes for children
of poorly educated single mothers. Finally, the authors also provide
evidence of a strong link between children’s test scores
at ages 4, 5, and 6 and their completed education.
Raquel Bernal, Department
of Economics, Northwestern University
Michael P. Keane, Department of Economics, Yale
University
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