The Effects of Female Immigration on the U.S. Childcare Market: Evidence from Prices and Earnings

In a market-based childcare system with limited public support, many American families purchase formal childcare, bearing the full cost themselves. While previous studies show low-skill immigration helps U.S-born women outsource household labor, the mechanism through childcare prices is less clear. This paper examines this effect, focusing on female immigration and U.S. childcare prices and worker earnings from 2010 to 2019. Using a county-level fixed-effects model with data from the National Database of Childcare Prices (NDCP) and the Annual Social and Economic Supplements of the Current Population Survey (CPS-ASEC), the study analyzes how the female immigrant labor force share affects prices across center-based, family daycare, and private household settings. Findings indicate a 10% increase in the female immigrant share is associated with a small, significant decrease in family day care prices (0.17–0.22%) but not center-based care prices. The impact on worker earnings is more substantial: the same 10% increase is linked to a 4% reduction in family daycare worker earnings, with no significant effects in other settings. This finding suggests that the slight price reduction for family daycare, coinciding with significantly reduced worker earnings, may be insufficient to stimulate maternal employment or yield significant economic advantages for low-income families. JEL Codes : J13, J15, J39