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

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  • V. Joseph Hotz
  • Mo Xiao

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.

Suggested Citation

  • V. Joseph Hotz & Mo Xiao, 2005. "The Impact of Regulations on the Supply and Quality of Care in Child Care Markets," NBER Working Papers 11873, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11873
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    1. repec:eee:ecoedu:v:64:y:2018:i:c:p:13-30 is not listed on IDEAS
    2. Stange, Kevin, 2014. "How does provider supply and regulation influence health care markets? Evidence from nurse practitioners and physician assistants," Journal of Health Economics, Elsevier, vol. 33(C), pages 1-27.
    3. John R. Bowblis & Andrew Ghattas, 2017. "The Impact of Minimum Quality Standard Regulations on Nursing Home Staffing, Quality, and Exit Decisions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(1), pages 43-68, February.
    4. Bastos, Paulo & Cristia, Julian, 2012. "Supply and quality choices in private child care markets: Evidence from São Paulo," Journal of Development Economics, Elsevier, vol. 98(2), pages 242-255.
    5. Bassok, Daphna & Fitzpatrick, Maria & Loeb, Susanna, 2014. "Does state preschool crowd-out private provision? The impact of universal preschool on the childcare sector in Oklahoma and Georgia," Journal of Urban Economics, Elsevier, vol. 83(C), pages 18-33.
    6. 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).
    7. John Bowblis & Judith Lucas, 2012. "The impact of state regulations on nursing home care practices," Journal of Regulatory Economics, Springer, vol. 42(1), pages 52-72, August.
    8. Marek Zapletal, 2017. "The Effects of Occupational Licensing Evidence from Detailed Business-Level Data," Working Papers 17-20, Center for Economic Studies, U.S. Census Bureau.
    9. 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.
    10. Daiji Kawaguchi & Tetsushi Murao & Ryo Kambayashi, 2014. "Incidence of Strict Quality Standards: Protection of Consumers or Windfall for Professionals?," Journal of Law and Economics, University of Chicago Press, vol. 57(1), pages 195-224.
    11. repec:bla:ecinqu:v:55:y:2017:i:2:p:736-756 is not listed on IDEAS
    12. Qing Wang, 2015. "Child Gender, Intergenerational Kinship and Parental Labor Market Outcomes," Review of Development Economics, Wiley Blackwell, vol. 19(4), pages 892-907, November.
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    14. repec:eee:pubeco:v:159:y:2018:i:c:p:183-202 is not listed on IDEAS
    15. Owens, Mark F. & Rennhoff, Adam D., 2014. "Provision and price of child care services: For-profits and nonprofits," Journal of Urban Economics, Elsevier, vol. 84(C), pages 40-51.
    16. Zierow, Larissa, 2017. "Regulating Child Care Markets. Center-based Care vs. Family Day-Care in Germany," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168052, Verein für Socialpolitik / German Economic Association.
    17. Boyd-Swan, Casey & Herbst, Chris M., 2017. "Racial and Ethnic Discrimination in the Labor Market for Child Care Teachers," IZA Discussion Papers 11140, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L8 - Industrial Organization - - Industry Studies: Services

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