Recession, Stimulus and the Child Care Sector: Understanding Economic Dynamics, Calculating Impact

 As part of the new Stimulus Bill (ARRA), states and localities may be required to show economic impact of the stimulus funds. This brief has been developed to help state policymakers calculate the stimulus effects of increased child care spending on output and employment in the state economy.

There are three important aspects of the child care sector which need to be counted when assessing economic impact: 1) direct employment and output in the child care sector itself, 2) multiplier effects of the sector in the broader regional economy, and 3) the social infrastructure role child care plays in supporting the parent workforce. All of these are short term economic effects. This report will address each of these aspects in turn and show how to calculate these effects using an example with data from the State of Kansas. But first we must understand the structure of the child care sector.

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