Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn.
Maternal Time, Child Care and Child Cognitive Development: The Case of Single Mothers
General Form Difficulties Interpretation
Welfare and Decisions
Bernal Raquel
Michael Keane
Time Limits Work Requirements Welfare Rules Child Care EITC
March 29, 2009
Data Results First-Stage Main Age-Specific Types of Care
Working Paper
Maternal Time, Child Care and Child Cognitive Development
Relationship between early test scores and subsequent outcomes
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules
• Neal and Johnson (JPE 1996) use NLSY: AFQT at 14-21 is a strong predictor of wages at ages 26-29. • Murnane, Willett and Levy (REStats 1995) use two longitudinal surveys of American high school seniors: math score at senior year at high school is correlated with wages of 24 year olds.
Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• Currie and Thomas (2001) using British National Child Development Study (NCDS): one s.d. increase in age 16 math scores is associated with a 14% higher wage rate at age 33.
Maternal Time, Child Care and Child Cognitive Development
Cognitive Ability Production Function
Bernal and Keane Review Attainment Prod. Fn. General Form
• Ben Porath (1967):
Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules
• Process of knowledge acquisition as a production
process • Current and past inputs interact with an individuals
genetic ability endowment
Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• Child’s development is a cumulative process depending
on parental decisions at pre-school age.
Maternal Time, Child Care and Child Cognitive Development
The Child’s Cognitive Ability Production Function
Bernal and Keane Review
Let Ait be child i’s cognitive ability t periods after birth.
Attainment Prod. Fn. General Form Difficulties
e it , C e it , ωi ), eit , G ln Ait = A(T
(2)
Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
where eit is a vector of period-by-period maternal time inputs • T through period t, e it is goods investment • G e it is day care/pre-school time investment • C • ωi is child’s initial endowment
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data
Difficulty in Evaluating Equation (2)
1. Each input at t is allowed to have different effect on achievement. Estimation is not feasible due to proliferation of parameters. • Need to restrict how the inputs enter Equation 2. • Assume: i. Only cumulative inputs matter, rather than their timing; ii. The effect of the permanent unobservable is constant over time. • Write
Results First-Stage Main Age-Specific Types of Care
ˆ it + α3 ln G ˆ it + ωi . ln Ait = α0 + α1 Tˆit + α2 C
(3)
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review
Difficulty in Evaluating Equation (2) 2. Selection between unobservable and decisions • Write: ωi = β0 + β1Ei + ω ˆi ,
Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements
(4)
where Ei is observed mother’s characteristics that capture the observed part of the initial ability. ω ˆ is mean-independent of mother’s characteristics.
• Also,
Welfare Rules Child Care EITC
Cit = π0 + π1 Ei + π2 ω ˆ i + π3 ccit + π4 Rit + cit ,
(5)
Data Results First-Stage Main Age-Specific Types of Care
where ccit : price of day care; Rit : welfare rules; cit : stochastic terms including taste of child care, shocks to child care availability, and shocks to wage.
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits
Cit = π0 +π1 Ei +π2 ω ˆ i +π3 ccit +π4 Rit +cit • Ei and Rit enters into Equation (5) because they determine wage offers and incentives to work or use welfare (hence work requirement) – Bernal and Michael do not deal with welfare use decision. – Note this gives the rationale of using Rit as instruments. – Rit is correlated with Cit through structure, but not ω ˆ i by design.
Work Requirements Welfare Rules Child Care EITC
• ω ˆ i enters because mother might compensate (or complement) child’s quality using child care.
Data Results First-Stage Main
– Hence Cit is correlated with ω ˆ i , which is unobserved to us.
Age-Specific Types of Care
• This gives us a clear presentation of why Cit is endogenous and what can be used as instruments.
Maternal Time, Child Care and Child Cognitive Development
Difficulty in Evaluating Equation (2)
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties
3. “Time” invested. Since no Tit in data, assume Tit = T − Cit . We have:
Interpretation
Welfare and Decisions
ˆ it + α3 ln G ˆ it + ωi . ln Ait = α0 + α1 T + (α2 − α1 )C
Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• We can only identify (α2 − α1 ), net effect of child care relative to the effect of mother’s time invested.
(6)
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane
Tit = T − Cit • Also note that here mothers’ work decisions are
allowed to affect children’s attainments trough income. Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• Sine work itself doesn’t affect available time invested on
children, it has no direct effect on outcome. • However, even after controlling for income, most studies
find it is positively associated with time invested in kids (Guryan, Hurst, Kearney, JEP 2008). • One may temp to include work in equation 6. • One explanation is ω ˆ t , the unobserved tastes of child care affect both time invested on kids and work decisions; but work itself does not affect Ait . • If this is true, • Work should have the same effect as T (but T is combined constant term). One way to identify α1 . • Need to worry about endogeneity.
Maternal Time, Child Care and Child Cognitive Development
Difficulty in Evaluating Equation (2)
Bernal and Keane Review Attainment Prod. Fn.
4. We don’t observe Git . • Write:
General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
g
ˆ it + γ4 ln ˆIit + γ5 t + , ln Git = γ0 + γ1 Ei + γ2 ω ˆ it + γ3 C it where: ˆIit is cumulative income. • Note that ˆIit is determined by mothers’ work, which clearly correlates with ω ˆt . • Fundamental reason why income is considered as endogenous in most cases.
(7)
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review
Estimable Equation • Substituting Equation (7) in (6), we have: ˆ it ln Ait = α0 + α1 T + (α2 − α1 )C
Attainment Prod. Fn.
g
ˆ it + γ4 ln ˆIit + γ5 t + ] + α3 [γ0 + γ1 Ei + γ2 ω ˆ it + γ3 C it ˆ it = (α0 + α3 γ0 ) + (α1 T + α3 γ5 ) + (α2 − α1 + α3 γ3 )C
General Form Difficulties Interpretation
g + α3 γ4 ln ˆIit + α3 γ1 Ei + (1 + α3 γ2 )ˆ ωi + α3 it ,
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
or, ˆ it + β3 ln ˆIit + β4 Ei + ω ˆˆ i ln Ait = β0 + β1 t + β2 C • Equation (8) is estimable, but need to note: 1. OLS is inappropriate; 2. Note that Iit is also endogenous. Needs to be instrumented as well.
(8)
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules
Effect of Child Care Decision • Interpretation of β’s not direct. We have
β2 = (α2 − α1 + α3 γ3 ). – The effect of child care is net of the effect of mother’s time (α1 ) plus the effect of any change in goods inputs that the mother may choose as a result of using day care (α3 γ3 ). – Note that γ3 comes from Equation (7), goods invested on child under current policies, which is not structural.
Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
– Ability of IV estimation of Equation (8) to predict policy experiments is only up to policies that do not alter γ3 !
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules
Effect of Child Care Decision • Interpretation of β’s not direct. We have
β2 = (α2 − α1 + α3 γ3 ). – The effect of child care is net of the effect of mother’s time (α1 ) plus the effect of any change in goods inputs that the mother may choose as a result of using day care (α3 γ3 ). – Note that γ3 comes from Equation (7), goods invested on child under current policies, which is not structural.
Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
– Ability of IV estimation of Equation (8) to predict policy experiments is only up to policies that do not alter γ3 ! · Child care subsidy is not this kind of policies. · A policy that leaves wage and cost of child care unaltered will be, for example, work requirement.
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn. General Form
Empirical specifications also allow for: • Effect of child care to interact with E. • Estimate different versions of Equation (8) according to different providers of child care. Equation estimated:
Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
ˆ it + β3 ln ˆIit + β4 Zi + η1 di1t + η2 di2t + νit , (11) ln Sit = β0 + β1 t + β2 C where Zit is mother’s time-invariant characteristics, dijt , j = 1, 2 is dummy variable for PPVT (j = 1) and PIAT-Math. Note that: g ˆ νit = ω ˆ i + ˆit + it ,
ˆ it and ˆIit . OLS estimation of (11) is biased. are correlated with C
Maternal Time, Child Care and Child Cognitive Development
Welfare Rules and Their Effects on Work and Child Care Decisions of
Bernal and Keane
Mothers
Review Attainment Prod. Fn. General Form Difficulties
• Construct individual policy variables:
Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
– for example, AFDC benefit level according to number of children; whether or not a woman is subject to time limit given age of youngest child.. • State level policy variables:
– Vary across States and time, but not across individuals in the same State and year.
Maternal Time, Child Care and Child Cognitive Development
Policies that generate plausible exogenous variation in work incentives, child care prices
Bernal and Keane Review Attainment Prod. Fn. General Form
and availability 1. Time Limits: • Section 1115 Waivers and TANF canceled the entitlement of the welfare benefit.
Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
– No more than 60 months and up to 20% exemption of federal funds – NY and MI use their own money to finance; no time limit; – CA cuts only the adult share when expires; TX and FL between 2-3 years. • Forward looking mothers decide to use welfare by comparing current period benefit and potential earnings plus option-value. – The option value should be child-age dependent (Grogger and Michalopoulos, JPE 2003).
Maternal Time, Child Care and Child Cognitive Development
Time Limits - Cont.
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• For IV purpose, several policy parameters are
exogenous to childrens attainments (but related to mothers decisions) – State implementation time (anticipation effect) – Will a single mother be bind by the requirement? (direct effect) – Remaining categorical time for welfare (value of the welfare option)
Maternal Time, Child Care and Child Cognitive Development
2. Work Requirements, Exemptions, and Sanctions
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions
Work Requirements: • Under PRWORA, recipients must participate in work
activities as soon as job ready or no later than two years after coming to assistance.
Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
– More than 20 States require immediate work. – Huge variation in the timing and strength work requirement is implemented. For example, IW-1994; WI-1996; NY-1998; NJ: 1999.
Maternal Time, Child Care and Child Cognitive Development
Exemptions and Sanctions
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• An exemption for no more than a year is allowed. – Most States choose mothers with children between 3-6 months. – Variables: whether implement work requirement; Age of youngest kid • Under TANF, other exemptions – Children under 6 who are unable to obtain child care; – Disabled HH member Variables: no. of exemptions; • Sanctions: partially to fully taken away benefit if violated
Maternal Time, Child Care and Child Cognitive Development
AFDC/TANF Benefit Levels, Earning Disregards and Benefit Reduction Rates
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
Vary considerably across States • Guarantee level • Benefit reduction rate • Earning disregards: – Benefit does not reduce for a while to encourage work among recipients – Include a flat and a percentage part – Under PROWRA, some States have indefinite time for earning disregards
Maternal Time, Child Care and Child Cognitive Development
Child Care Subsidies and the Child Care and Development Fund (CCDF)
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements
• The Family Support Act of 1988: – Created AFDC Child Care and Transitional Child Care to allow for child care while working – TCC allows for up to 1 year after leaving AFDC to start working. • OBRA 1990:
Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• At-Risk Child Care Program and the Child Care and the
Development Grant • Former one cares for child care for those who may be
on welfare without child care while working; • Second one is for low-income families generally
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• PROWRA consolidates four into CCDF. • Help low-income families in general • Block grant to State (not entitled) • Autonomy for States to design own programs Income eligibility, reimbursement rate ceiling and parent co-payment vary across State • Use CCDF per single mother to control generosity of
child care – Not program parameters since not all enjoy
Maternal Time, Child Care and Child Cognitive Development
Earned Income Tax Credit
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• Income tax credit that supplements work Expansion in
1986, 1991, 1994 and 1996 • Program parameters:
Phase-in region; max credit; phase-out region • Treat families with one discriminatory (especially so
after 1994 expansion)
Maternal Time, Child Care and Child Cognitive Development
National Longitudinal Survey of Youth 1979
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• NLSY mothers were between 14 to 21 on Jan 1, 1979. • During 1986, 1988, 1992, and 1994-2000, information of the first three years of parental child care since birth were collected retrospectively for all children. – Fourth and Fifth years use information of four weeks prior to the interview. • Use child care if reported more than ten hours of it. – Types of child care include relative or non-relative, day care center, nursery/preschool or regular school. • 1,519 single mothers. Among them, 251 had kids between 1990 and 2000. – No say on how different these two groups are.
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
Data Pattern
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
First-Stage Results • Table 7 shows the first-stage results.
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions
• Two regressions: Endogenous regressors with and
without excluded regressors. – They say R 2 increases so excluded regressors are powerful. – Instruments are jointly significant. – Not standard way to evaluate the validity of IV!
Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• No Overidentification or Weak IV tests.. etc.
Maternal Time, Child Care and Child Cognitive Development
Child Attainment Production Function
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• OLS estimates of child care bias upwards. • Cumulative income since birth not significant. • Effect of child care (α2 − α1 + α3 γ3 ) = −2.62%. • Interactions between child care and (i) mother’s education level, and (ii) number of children
are both negative but insignificant. – In Bernal (2007), she finds coefficients are significant if we use a structural model.
Maternal Time, Child Care and Child Cognitive Development
Age-Specific Effects
Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• Developmental psychology literature argued that the effect of home inputs on achievement crucially depends on timing. • Allow home inputs to interact with age in Equation (11). • Results show child care in the first year is not detrimental, but child care after the first year is harmful.
Maternal Time, Child Care and Child Cognitive Development Bernal and Keane Review Attainment Prod. Fn. General Form Difficulties
Different Types of Child Care • Distinguishing qualities of care is not easy. • Use types of child care as a proxy: – Formal care: center-based – Informal care: Relative or non-relative
Interpretation
Welfare and Decisions Time Limits Work Requirements Welfare Rules Child Care EITC
Data Results First-Stage Main Age-Specific Types of Care
• Results indicate only informal care is detrimental. Formal care is positive but insignificant. – May be because informal care is usually used by mothers who can’t afford better (center-based) care. – OLS shows that higher educated mothers are correlated with more center-based care. – Among informal care, relatives care are the cause of negative outcomes.
