The Impact of Federal Nutrition Support for Infants and Young Children on Home Daycare Services

Many small, home-based, childcare businesses participate in the Child and Adult Care Food Program (CACFP). This large but little-studied federal program provides fixed reimbursements for food costs to support nutrient-dense meals and snacks for young children in out-of-home care. We use unique, richly detailed administrative data and a policy reform that exogenously increased some providers’ reimbursements to estimate causal effects of CACFP on childcare services. An own-price effect on food service, a positive effect on complementary services, and a possible pass-through of reimbursements in prices are predicted. There is suggestive evidence of price increases for the care of very young children and for before-and-after-school care. We fail to find significant effects on indicators of provider quality. In a heterogeneity analysis, there are no differences in response by child poverty. In contrast, significant findings on dinner and duration in the sample are driven by the non-rural providers. Overall, CACFP may especially benefit low-income households by increasing opportunities to receive subsidized food away from home and better accommodating lengthy work days and nonstandard schedules.