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Excerpt from abstract:
This paper describes the main subsidy programs in the U.S., discusses economic issues that arise in designing such programs and evaluating their effects, and surveys evidence on the effects of the programs. An important theme ... is the tradeoff between the policy goals of increasing economic independence and improving child outcomes. All child care and early education subsidies affect both work incentives and inputs to child development. But a subsidy designed specifically to achieve one of these policy goals will usually be relatively ineffective at accomplishing the other goal. The evidence indicates that child care subsidies that reduce the effective price to parents of all purchased child care, regardless of the type and location of care, cause the employment rate of mothers of young children to increase.