Employment and Child Care Decisions of Mothers and the Well-being of their Children

This paper develops and estimates a dynamic model of employment and child care decisions of women after birth in order to evaluate the effects of mothers' decisions on children's cognitive ability. I use data from the NLSY to estimate the model. The results suggest that the effects of maternal employment and child care use on children's cognitive ability are rather sizeable. In fact, having a full-time working mother who uses child care during the first 5 years after the birth of the child is associated with a 10.4% reduction in ability test scores. Based on the estimates of the model, I assess the impact of policies related to parental leave, child care and other incentives to stay at home after birth on women's decisions and children's outcomes