Child Care Costs and Lone Mothers’ Employment Rates: UK evidence

Abstract

Fewer than one half of Britain's lone mothers are in paid employment. Their employment rates are low relative to those of other mothers and fell during the 1980's. The most commonly-cited explanations for the low employment rates are disincentives provided by the benefit system, and a lack of suitable jobs or affordable child care. In this paper we use data from the 1989 U.K. Lone Parent Survey to provide new evidence about the determinants of U.K. lone mothers' employment rates, and about the impact of child care costs in particular. We find significant disincentive effects for child care costs, plus some novel findings about knowledge of the benefit system, and measures of human capital and financial stability and security.