Disclaimer

This paper reports the results of research and analysis undertaken by Census Bureau staff. It has undergone a Census Bureau review more limited in scope than that given to official Census Bureau publications. This report is released to inform interested parties of ongoing research and to encourage discussion of work in progress.

Many families, especially those with low incomes, confront the challenge of paying for child care expenses in order to work and earn a living. Recognizing this, a National Academy of Sciences Panel on Poverty and Family Assistance recommended taking these expenses into account in a new, updated measure of poverty. Employing 1995 data from the Survey of Income and Program Participation, this paper compares the effect of using different methods of estimating child care expenses on poverty rates under the new, experimental poverty measure.

Our analysis indicates that the NAS’s specific recommendations for taking child care expenses into account could be improved. While the overall differences in the effect of the different methods are moderate, the alternatives we propose are conceptually more appealing and technically no more complex to implement than the NAS methods. A couple of these methods should therefore receive serious consideration for adoption in the experimental poverty measure.