Demography, Vol. 29, No.1, February 1992 Self-Employment and Providing Child Care* Rachel Connelly Bowdoin College Brunswick, ME 04011 This paper considers self-employment and providing child care as occupational strategies that can lower the cost of child care. If the ability to care for one's own children while engaged in market work is important to mothers with young children, we predict that women with young children will be more likely to choose to be self-employed or to be a child care provider than women without young children. The analysis provides strong support for this hypothesis, The results show that the presence of young children is an important factor in choosing self-employment and in choosing to be a child care provider. Finally, simulations are presented which show that a woman's choice among these sectors is quite sensitive to the number and ages of her young children. In the study of women's labor force participation, one of the most consistent empirical findings is the negative effect of the presence of young children on the probability of participation, Several reasons have been offered for this relationship. The presence of young children increases the value of the mother's time at home and introduces the need to make alternative child care arrangements if the mother is to be employed, Problems encountered in arranging child care can act as "a substantial constraint on employment for mothers with pre-school children" (Presser and Baldwin 1980, p, 1203). The cost of child care lowers the effective wage that the mother could earn in the labor market, and in doing so makes employment less attractive (Connelly 1989). In addition to the money cost of child care, families using nonfamily child care face the fear that their current child care arrangements may break down on short notice, and worry about the quality of care their child is receiving. In view of the nature of the constraint that young children place on women's employment, the simple choice between being employed and not being employed may mask important aspects of the decision regarding participation. A more illuminating approach is to consider the variation across employment strategies in constraints imposed by child care, with particular attention to employment options that lessen the constraint which child care needs place on the mother's employment. Among the employment choices that have been studied, the following appear to lessen this constraint: shift work for one or both parents, which allows one of the parents to be with the children most of the day; flextime, which allows parents to stagger their work hours; flexplace, which allows some or all of the job to be done at home; and part-time employment. This paper focuses on two alternative strategies, self-employment and providing child care. These employment choices differ from those cited above in that they offer a woman with young children the potential to care for her own children while engaged in paid * This paper was originally presented at the 1990 meeting of the Population Association of America. The research was supported by the Census Bureau through NSF Grant SES 87-13643. Many thanks to Maria Enchautequi, Deb DeGraff, Alicia Cackely, and two anonymous referees for useful comments. Copyright © 1992 Population Association of America 17