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The need for nonmaternal child care has risen dramatically as increasing numbers of mothers with preschool children have entered the labor force. This report considers the effects of child care costs on the supply of new mothers in the work force. The authors examine the role of federal and state subsidies — in the form of income tax deductions and credits for child expenses — in the rapid increase in work among mothers of very young children. They focus on the labor supply of women immediately following their first birth in order to understand to what extent child care subsidies have promoted the rapid growth in labor supply among mothers of very young children. Finally, they discuss a model of women's return to work and their implementation of that model using data from the National Longitudinal Survey of Youth. They also include empirical estimates of the effect of child care costs on return to work after childbirth.

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