The efficacy of the dependent care deduction at maintaining diet quality

Abstract

One feature of the SNAP benefits calculation, the Dependent Care Deduction, increases SNAP benefits if a household pays for formal care, allowing for an indirect substitution between household time spent in dependent care and SNAP benefits. Approximately only 3 percent of eligible households utilize the Dependent Care Deduction, despite many eligible households facing significant time constraints. Therefore, I investigate the reduction in childcare time needed for a household to maintain their level of diet quality if they were to select into paid childcare. Using the American Time Use Survey I predict time spent in numerous activities for households in the National Household Food Acquisition and Purchase Survey. In particular, I focus on secondary childcare time, time where the caregiver is completing a separate task while responsible for the well-being of a child because it is the dependent care activity reduced most by formal childcare. Estimating a conditional hybrid diet quality production function, I find that the marginal rate of substitution between household income and secondary childcare is higher for lower income levels and more time-constrained households. In addition, I find the necessary reduction in secondary childcare time to hold diet quality constant is approximately 5.3 h per day for all households and 3 h per day for SNAP households, assuming the average cost of one four-year old child in formal care.