Maternal Time, Child Care and Child Cognitive Development: The Case of Single Mothers

This paper evaluates the effects of home inputs on children’s cognitive development using the sample of single mothers in the National Longitudinal Survey of Youth (NLSY). Of course, an important selection problem arises when trying to assess the impact of maternal time and income on children’s development. To deal with this, we take advantage of (plausibly) exogenous variation in employment and child care choices of single mothers generated by the differences in welfare regulations across states and over time. This approach is motivated by the fact that the Welfare Reform of 1996, as well as earlier State level changes adopted under Section 1115 Welfare Waivers, generated substantial increases in work and child care use. Thus, we construct a comprehensive set of welfare policy variables at the individual and State level, and use them as instrumental variables in order to estimate child cognitive ability production functions. 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% in test scores. However, this general finding masks important differences across types of child care and across child age ranges. Formal child care (i.e., pre-school, formal center based care) does not have any adverse effect on cognitive outcomes, nor does formal or informal care in the first year. Only nonformal types of child care lead to significant reductions in child’s achievement, in particular, if used after the first year after childbirth. Finally, the effect of household income since the birth of the child is statistically insignificant, given controls for mother’s education. This is consistent with a view that permanent income is significant in determining children’s achievement while transitory income is not.