Child care in the wake of welfare reform: The impact of government subsidies on the economic well-being of single-mother families

Using microsimulation techniques to estimate the impact of welfare reform in New York, we find that 5 years after federal and state reforms child-care use and costs will rise substantially and families will bear most of these costs. When family incomes are adjusted for child-care costs, most single-mother families will continue to be poor even with greater earnings, the Earned Income Tax Credit, and food stamps. The distribution of child-care costs between government and families, and the implications for poverty, will depend on the extent to which government subsidizes the child-care costs of single mothers.