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American Economic Review: Vol. 101 No. 5 (August 2011)

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The Impact of Regulations on the Supply and Quality of Care in Child Care Markets

Article Citation

Hotz, V. Joseph, and Mo Xiao. 2011. "The Impact of Regulations on the Supply and Quality of Care in Child Care Markets." American Economic Review, 101(5): 1775-1805.

DOI: 10.1257/aer.101.5.1775

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. (JEL H75, J13, L51, L84)

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Authors

Hotz, V. Joseph (Duke U)
Xiao, Mo (U AZ)

JEL Classifications

H75: State and Local Government: Health; Education; Welfare; Public Pensions
J13: Fertility; Family Planning; Child Care; Children; Youth
L51: Economics of Regulation
L84: Personal, Professional, and Business Services


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