Income-Pooling Arrangements, Economic Constraints, and Married Mothers' Child Care Choices

Abstract

This study investigates whether financial agreements between husbands and wives, the cost of child care, mothers' wages, and sources of income, rather than just aggregate income, affect a mother's decision to use child care. This study finds that for working mothers, the price of child care is what matters, not their wages; for nonemployed mothers, the reverse is true. However, similar patterns for income effects are found for all mothers. Husbands' incomes do not affect mothers' child care choices, but mothers' own abilities to pay and sources of nonwage income do affect their child care choices. The only detected effect of spouses' incomes on wives' child care choices occurs when husbands pool their incomes with their wives' incomes. Hence, although market child care is a collective consumption good, not all wives in two-parent families have access to husbands' incomes with which to pay for child care.