Child Care and Poverty Dynamics Given the Official and Alternative Poverty Measures

• Activity Number: 287
• Type: Topic Contributed
• Date/Time: Tuesday, August 3, 2010 : 8:30 AM to 10:20 AM
• Sponsor: Social Statistics Section
• Author(s): Sharon I. O'Donnell*+
• Companies: U.S. Census Bureau
• Keywords: SIPP ; Longitudinal ; Poverty ; Childcare

Abstract

In this paper, we examine the role of child care on poverty entry and exit from 2001 to 2007 using SIPP and two measures of poverty. The U.S. official poverty measure has a threshold based on three times food cost. Income is defined as annual pre-tax cash income. The threshold for the alternative poverty measure is based on current expenditures for basic goods. Income includes non cash benefits, net capital gains/losses. taxes, medical out of pocket expenditures and work related expenditures including child care. Families can choose to have an adult member provide child care services (and forgo their wages) or have all wage earners work for pay and purchase services. The need for child care declines as children age. Analysis tests the theoretical results that explains how choice and the family life cycle period influence poverty entry and exit.