The Effects of State Regulations on Childcare Prices and Choices
We examine the effects of state-level childcare regulations on the price of childcare, the type of care chosen, and mothers' decisions to work using regulations collected from state archives and data from the National Childcare Survey, which was collected in the U.S. in 1990. We find that regulations have an economically significant effect on the price of childcare, which in turn affects both the demand of regulated care and the labor force participation choices of the mothers. We find no direct quality assurance effect of regulation on childcare demand. This suggests that regulations may not achieve their intended objectives, and alternatives such as subsidies might be more effective at achieving policy goals.
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