The Performance of the Child‐Care Subsidy System

Government funding has increased substantially in recent years for child‐care subsidies targeted on the poor. Given the importance of child care for the achievement of public policy goals, including the promotion of families' economic self‐sufficiency outside the welfare system, the performance of the child‐care subsidy system deserves scrutiny. We use data from household‐level surveys to compare the target efficiency, coverage adequacy, and equity of the child‐care subsidy system for low‐income and welfare‐recipient families in California. The results suggest serious limitations in the system as of the mid‐1990s. Low‐income families in which mothers were employed or in education and training programs were very likely to be regularly paying for child care, and very few were receiving public subsidies targeted explicitly to the poor. These findings have important policy implications for new state child‐care and welfare programs.