Child care demand and labor supply of young mothers over time

This paper uses panel data from the National Longitudinal Survey of Youth (NLSY) to analyze jointly fertility, employment, and child care decisions of young women over time. As these young women age (from 21 to 25 years on average) they become increasingly likely to have young children, to be employed, and to use non-relative forms of child care. A multivariate analysis reveals that rising wage rates and changes in household structure are important determinants of these upward trends. Further analysis reveals a considerable amount of movement each year among states defined by the presence of young children, employment, and child care arrangement. Overall the young women in the NLSY can be characterized as being in a volatile stage of their lives, when many economic and demographic factors are changing. They appear to respond to these changes by altering their labor supply and child care behavior.