Working Paper: NBER ID: w11873
Authors: V. Joseph Hotz; Mo Xiao
Abstract: We examine the impact of state child care regulations on the supply and quality of care in child care markets. We exploit panel data on both individual establishments and local markets to control for state, time, and, where possible, establishment-specific fixed effects to mitigate the potential bias due to policy endogeneity. We find that the imposition of regulations reduces the number of center-based child care establishments, especially in lower income markets. However, such regulations increase the quality of services provided, especially in higher income areas. Thus, there are winners and losers from the regulation of child care services.
Keywords: Child care regulations; Supply and quality; Child care markets
JEL Codes: L51; L81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Imposition of regulations (G18) | Reduction in the number of center-based child care establishments (J13) |
| Increasing stringency of existing regulations (G18) | Reduction in the number of child care centers (J13) |
| Imposition of regulations (G18) | Increase in the quality of services provided (L15) |
| Imposition of regulations (G18) | Crowding-out effect pushing children to less regulated family day care homes (J13) |
| Imposition of regulations (G18) | Different outcomes based on socioeconomic context (P36) |