Because women typically serve as primary care providers for their children, female labor force participation behavior is likely to be affected significantly by the costs associated with replacing maternal care with nonmaternal care. While some evidence of this phenomenon exists in the economics literature, discrepancies across studies make it difficult to provide conclusive evidence of the employment effects of these child care costs. This paper uses an improved SIPP survey design to present new evidence regarding the degree to which child care prices impede mothers' employment behavior, with additional evidence of the difference in these elasticities across marital status, empirical technique, and equation specification. This permits linking this paper to the existing evidence, drawing the conclusion that child care prices impede mothers' employment behavior significantly, with single mothers exhibiting less responsiveness in their labor force participation behavior to child care price changes than married mothers. Generally, these results support the basic finding of Ribar (1992), reject the smaller price of care elasticities found by Averett et al. (1997), Blau and Robins (1988), Connelly (1992), and Tolin (1992), but replicate the lower elasticities found in these papers by changing equation specifications. Also, significant sensitivity in the price elasticity is revealed, particularly with respect to changes in equation specification.

In recent years, public attitudes toward single mothers have changed dramatically, and policymakers are being pressed to devise reforms that will reduce their welfare dependency. In the summer of 1994, at least 11 separate welfare reform proposals were being debated by Congressional committees. Because child care is relatively expensive compared to potential earnings for single mothers, extensions to current child-care assistance programs will be an integral component of any welfare reform package. Very little evidence exists regarding child-care utilization patterns and links to employment for low-income mothers. Exceptions include Mark Berger and Dan Black (1992) and the recent Congressional testimony given by Jane Ross (1994) of the GAO. Contributing to the changing attitudes toward welfare recipients is the change in the demographic makeup of the labor force. Overall female labor-force participation rates have grown dramatically in the past 30 years, from 45 percent in the mid-1960's to 75 percent in the early 1990's. As a result, subsidizing poor single mothers so that they can stay at home with their children while more and more married mothers are working for pay has become less popular. This has led to the encouragement of work, particularly full-time work, as a means of poverty reduction for single mothers.! Unfortunately, child care costs represent a significant employment barrier. On average, child care costs $63 per week overall, and $44 per week for care by a relative. For the typical single mother, child-care costs range between 15 percent and 30 percent of earned income, depending on the mode of care and hourly wage.2