The Introduction of Universal Child Care in New Mexico: Initial Evidence on Mothers' Labor Supply

Chris Herbst ()
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Chris Herbst: Arizona State University

No 18968, IZA Discussion Papers from IZA Network @ LISER

Abstract: In November 2025, New Mexico became the first U.S. state to implement a universal, no-cost child care subsidy program. This paper estimates difference-in-differences and event-study models to evaluate the impact of universal child care on mothers' short-run labor supply adjustments. Using monthly Current Population Survey data, I find that the reform produced different responses across lower- and higher-skilled mothers. For lower-skilled mothers, the policy increased employment along both the extensive and intensive margins. Conversely, higher-skilled mothers, particularly those who are married, experienced reductions in paid work, with partially offsetting increases in school enrollment. Thus, while universal child care relaxes a binding constraint among disadvantaged families, it acts as an in-kind transfer for their advantaged counterparts.

Keywords: child care; labor supply; maternal employment (search for similar items in EconPapers)
JEL-codes: H75 J13 J22 (search for similar items in EconPapers)
Date: 2026-10
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