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Updated 11:00 AM April 19, 2004



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Childcare subsidies aid the transition from welfare to work

Childcare subsidies help low-income women stay in their jobs and earn more money, a U-M professor says.

A new study shows that a policy change to expand the number of families who receive subsidies could lead to improved work outcomes among welfare recipients.

"This is very important in the current policy climate, as states have cut childcare funding due to budget deficits," says Sandra Danziger, associate professor in the School of Social Work and the director of the Michigan Program on Poverty and Social Welfare Policy. "At the federal level, the House and Senate differ on whether to increase or freeze childcare funding in the welfare reauthorization bills."

The research, "Childcare Subsidies and the Transition from Welfare to Work," appears in a recent issue of Family Relations. Danziger co-authored the study with Elizabeth Oltmans Ananat, economics graduate student at the Massachusetts Institute of Technology, and Kimberly Browning, research associate at the High/Scope Educational Research Foundation.

The research addresses how childcare subsidies have helped in the welfare-to-work transition after the 1996 federal welfare reform. Using data from a random sample of welfare recipients who were subject to work requirements, the findings show that subsidy receipt is a significant predictor of how much they earn and how long they remain in their job, the authors say.

On average, women who received subsidies worked in 8 percent more months in the study period and had double the earnings, compared with those who did not have this financial assistance.

Forty-two percent of respondents who were income-eligible to receive subsidies and had at least one child under age 14 utilized the subsidy during 1999. Danziger says if childcare funding does not increase, and if simplified procedures do not allow more who qualify to obtain subsides, demand for assistance for care will continue to outstrip supply.

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