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Cost Functions, Efficiency, and Quality in Day Care Centers

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  • H. Naci Mocan

Abstract

Using a new data set, this paper finds that there is no quality difference between nonprofit and for-profit day care centers, and with the exception of one segment of the nonprofit sector, there is no efficiency difference. The cost of increasing the quality from mediocre to good is between 12 and 16 cents per child-hour. Centers have inelastic demand for workers. Child care workers with 13 to 15 years of education and workers with more than 16 years of education are substitutes; workers with more than 16 years of education are complements to workers with 12 or fewer years of education. There are economies of scale and scope in production.

Suggested Citation

  • H. Naci Mocan, 1997. "Cost Functions, Efficiency, and Quality in Day Care Centers," Journal of Human Resources, University of Wisconsin Press, vol. 32(4), pages 861-891.
  • Handle: RePEc:uwp:jhriss:v:32:y:1997:i:4:p:861-891
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    Cited by:

    1. Herbst, Chris M. & Tekin, Erdal, 2010. "Child care subsidies and child development," Economics of Education Review, Elsevier, vol. 29(4), pages 618-638, August.
    2. Elisabeth Gugl & Linda Welling, 2010. "The Early Bird Gets The Worm? Birth Order Effects In A Dynamic Family Model," Economic Inquiry, Western Economic Association International, vol. 48(3), pages 690-703, July.
    3. 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.
    4. Herbst, Chris M., 2015. "The Rising Cost of Child Care in the United States: A Reassessment of the Evidence," IZA Discussion Papers 9072, Institute for the Study of Labor (IZA).
    5. Boyce, John R. & Hollis, Aidan, 2005. "Governance of electricity transmission systems," Energy Economics, Elsevier, vol. 27(2), pages 237-255, March.
    6. SHIMIZUTANI Satoshi & NOGUCHI Haruko, 2003. "Quality of Child Care in Japan: Evidence from Micro-level Data (in Japanese)," ESRI Discussion paper series 054, Economic and Social Research Institute (ESRI).
    7. Egbert Henrik & Hildenbrand Andreas, 2012. "Der Coupon-Handelsansatz als Modell für eine subjektbezogene Finanzierung der Kinderbetreuung / The Coupon Trading Approach as a Model for a Subject-based Financing System of Early Childhood Education," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(2), pages 116-128, April.

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