Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Impact of Minimum Quality Standards on Firm Entry, Exit and Product Quality: The Case of the Child Care Market

Contents:

Author Info

  • V. Joseph Hotz
  • Mo Xiao

Abstract

We examine the impact of minimum quality standards on the supply side of the child care market, using a unique panel data set merged from the Census of Services Industries, state regulation data, and administrative accreditation records from the National Association of Education for Young Children. We control for state-specific and time-specific fixed effects in order to mitigate the biases associated with policy endogeneity. We find that the effects of quality standards specifying the labor intensiveness of child care services are strikingly different from those specifying staff qualifications. Higher staff-child ratio requirements deter entry and reduce the number of operating child care establishments. This entry barrier appears to select establishments with better quality into the market and alleviates competition among existing establishments: existing establishments are more likely to receive accreditation and higher profits, and are less likely to exit. By contrast, higher staff-education requirements do not have entry-deterrence effects. They do have the unintended effects of discouraging accreditation, reducing owners’ profits, and driving firms out of businesses.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: ftp://ftp2.census.gov/ces/wp/2005/CES-WP-05-28.pdf
File Function: First version, 2005
Download Restriction: no

Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 05-28.

as in new window
Length: 55 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:cen:wpaper:05-28

Contact details of provider:
Postal: 4600 Silver Hill Road, Washington, DC 20233
Phone: (301) 763-6460
Fax: (301) 763-5935
Email:
Web page: http://www.census.gov/ces
More information through EDIRC

Related research

Keywords:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Janet Currie & V. Joseph Hotz, 2002. "Accidents Will Happen? Unintentional Childhood Injuries and the Effects of Child Care Regulations," JCPR Working Papers 268, Northwestern University/University of Chicago Joint Center for Poverty Research.
  2. Chipty, Tasneem, 1995. "Economic Effects of Quality Regulations in the Day-Care Industry," American Economic Review, American Economic Association, vol. 85(2), pages 419-24, May.
  3. Angrist, Joshua D. & Guryan, Jonathan, 2008. "Does teacher testing raise teacher quality? Evidence from state certification requirements," Economics of Education Review, Elsevier, vol. 27(5), pages 483-503, October.
  4. Crampes, C. & Hollander, A., 1991. "Duopoly and Quality Standards," Cahiers de recherche 9128, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  5. William T. Gormley, 1991. "State regulations and the availability of child-care services," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 10(1), pages 78-95.
  6. Blau, David M., 2007. "Unintended consequences of child care regulations," Labour Economics, Elsevier, vol. 14(3), pages 513-538, June.
  7. Dunne, T. & Roberts, M.J. & Samuelson, L., 1988. "Pattenrs Of Firm Entry And Exit In U.S. Manufacturing Industries," Papers 1-88-2, Pennsylvania State - Department of Economics.
  8. Leland, Hayne E, 1979. "Quacks, Lemons, and Licensing: A Theory of Minimum Quality Standards," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1328-46, December.
  9. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed The Labor Market?," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1169-1213, November.
  10. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 48-71, January.
  11. Edward P. Lazear, 2001. "Educational Production," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 777-803, August.
  12. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
  13. Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
  14. Shapiro, Carl, 1986. "Investment, Moral Hazard, and Occupational Licensing," Review of Economic Studies, Wiley Blackwell, vol. 53(5), pages 843-62, October.
  15. David M. Blau & H. Naci Mocan, 1999. "The Supply of Quality in Child Care Centers," NBER Working Papers 7225, National Bureau of Economic Research, Inc.
  16. H. Naci Mocan, 2001. "Can Consumers Detect Lemons? Information Asymmetry in the Market for Child Care," NBER Working Papers 8291, National Bureau of Economic Research, Inc.
  17. David Blau & Janet Currie, 2004. "Preschool, Day Care, and Afterschool Care: Who's Minding the Kids?," NBER Working Papers 10670, National Bureau of Economic Research, Inc.
  18. Tasneem Chipty & Ann Dryden Witte, 1997. "An Empirical Investigation of Firms' Responses to Minimum Standards Regulations," NBER Working Papers 6104, National Bureau of Economic Research, Inc.
  19. 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.
  20. David M. Blau, 1997. "The Production of Quality in Child Care Centers," Journal of Human Resources, University of Wisconsin Press, vol. 32(2), pages 354-387.
  21. David M. Blau, 2003. "Do child care regulations affect the child care and labor markets?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(3), pages 443-465.
  22. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
  23. Kleiner, Morris M & Kudrle, Robert T, 2000. "Does Regulation Affect Economic Outcomes? The Case of Dentistry," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 547-82, October.
  24. Hotz, V.J. & Kilburn, M.R., 1995. "Regulating Child Care: The Effetcs of State Regulation on Child Care Demand and its Cost," Papers 95-03, RAND - Labor and Population Program.
  25. Morris M. Kleiner, 2000. "Occupational Licensing," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 189-202, Fall.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Xiao, Mo, 2010. "Is quality accreditation effective? Evidence from the childcare market," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 708-721, November.
  2. Haizhen Lin, 2010. "Do Minimum Quality Standards Improve Quality? A Case Study of the Nursing Home Industry," Working Papers 2010-01, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cen:wpaper:05-28. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fariha Kamal).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.