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Regional Variation in Child Care Prices: A Cross-State Analysis

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  • Davis, Elizabeth E.
  • Li, NaiChia

Abstract

A recent study reported that the average annual fees for full-time infant care in a child care center ranged from $3,803 in Alabama to $13,480 in Massachusetts. This study analyses this variation in state-level average child care center prices using a standard economic model of supply and demand. We found that a large proportion of the variation in average child care prices can be explained by a small set of variables, including median family income, wages paid to child care workers, and the number of young children in the state. Although the gov-ernment plays an important role in the child care market, the wide variation in average fees across states mostly reflects what parents can afford to pay. Given the importance of quality child care to current workforce needs and future human capital development, strategies to in-crease affordability such as child care subsidies and tax credits should be considered along with direct investments in quality improvements.

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Bibliographic Info

Article provided by Mid-Continent Regional Science Association in its journal Journal of Regional Analysis and Policy.

Volume (Year): 39 (2009)
Issue (Month): 1 ()
Pages:

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Handle: RePEc:ags:jrapmc:132425

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Related research

Keywords: Community/Rural/Urban Development; Demand and Price Analysis;

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  1. Rachel Connelly & Jean Kimmel, 2003. "The Effect of Child Care Costs on the Employment and Welfare Recipiency of Single Mothers," Southern Economic Journal, Southern Economic Association, vol. 69(3), pages 498-519, January.
  2. Edwards, John H. Y. & Fuller, Bruce & Liang, Xiaoyan, 1996. "The mixed preschool market: Explaining local variation in family demand and organized supply," Economics of Education Review, Elsevier, vol. 15(2), pages 149-161, April.
  3. David M. Blau & Alison P. Hagy, 1998. "The Demand for Quality in Child Care," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 104-146, February.
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