Childcare subsidies: Do they affect labor supply of mothers and cognitive development of children

This dissertation is comprised of two essays in which we separately analyze what are the effects of childcare subsidies on employment outcomes of low income mothers, and how childcare subsidies take up affects the test scores of those children whose mothers take the subsidy to go to work. In the essays we analyze evidence of the effects of the childcare subsidy policy using survey and administrative data. We apply conventional estimators from the program evaluation econometrics literature and make some methodological contributions on how to identify parameters of the childcare subsidy effect on labor supply and cognitive development. The results evidence positive effects of the childcare subsidies policy on the labor supply of mothers and mixed effects on cognitive development of their children that are contingent on the type of childcare associated to the subsidy benefit. The two essays presented in this dissertation are a primary evidence of the effects of childcare subsidies in the post-welfare reform era. We provide some ideas on how to balance the inter generational policy dilemma implied in the answer to the question: should childcare subsidies emphasize employment promotion today or investments in building the set of skills that will characterize the labor force tomorrow?...