How effective are child care subsidies in reducing a barrier to work

Abstract

The cost of child care is one of the greatest financial barriers faced by parents returning to work. In recognition of this cost, the federal government provides child care subsidies to assist families to meet the cost of child care. This paper models the use of child care services and the provision of child care subsidies to determine how effective the child care support programs are in reducing the financial barriers that make returning to work difficult for many parents. Both childcare assistance and the newer childcare cash rebate are modelled. Their impact on families where both parents or the sole parent works are analysed for different family incomes and family sizes.