Working Paper: NBER ID: w25335
Authors: James Gordon; Chris M. Herbst; Erdal Tekin
Abstract: Despite the well-documented benefits of high-quality child care, many preschool-age children in the U.S. attend low-quality programs. Accordingly, improving the quality of child care is increasingly an explicit goal of government policy. However, accomplishing this goal requires a thorough understanding of the factors that influence parents’ child care decisions. This paper provides the first evidence on the demand for child care characteristics in the market for home-based care. Using a randomized audit design, we study three dimensions of caregiving: affordability (i.e., the hourly price of child care), quality (i.e., caregiver education and experience), and convenience (i.e., caregiver car ownership and availability). We find that while parents are extremely sensitive to the cost of child care, they also have strong preferences for quality, particularly caregivers’ educational attainment. Furthermore, we obtain mixed results on the convenience dimensions of child care, with parents valuing those owning a car but not those with more availability. Finally, we find significant heterogeneity in child care preferences according to families’ age of youngest child, race and ethnicity, and willingness-to-pay. Our findings are consistent with the notion that the problem of low-quality in the U.S. child care market may be explained by lack of affordability or the informational resources to identify high-quality care, rather than an undervaluation of such care by parents.
Keywords: Child care; Quality; Demand; Parents; Experimental evidence
JEL Codes: J13; J2; J23; J24; J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Price of child care (J13) | Demand for child care (J13) |
| Educational attainment (I21) | Demand for child care (J13) |
| Work experience (M53) | Demand for child care (J13) |
| Car ownership (R48) | Demand for child care (J13) |
| Availability (L15) | Demand for child care (J13) |
| Family characteristics (J12) | Demand for child care (J13) |