KICCE Policy Brief

CONTENT

The Impact of Expansion in Child Care Subsidy Coverage on Household Expenditure

Yoosik Shin

This study analyzes the effects of expansion in child care subsidy coverage on household expenditure while exploiting policy reform for such coverage, which grew from the lowest 70% income level to all households. We analyze how the households previously regarded as ineligible for child care subsidy in 2012 changed their expenditure pattern the following year, leading to eligibility. The difference in differences approach was used with households deemed eligible in both 2012 and 2013 as control groups. Our results show that expansion of child care subsidy coverage allowed newly eligible households to reduce overall consumption expenditure. In addition, some of the awarded child care subsidy was reinvested for children of the household. Furthermore, the child care subsidy coverage expansion increased non-consumption expenditures such as children’s savings and insurance.

Keywords: child care subsidy, household expenditure, difference in differences

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