Who Benefits From Child Care Ratings
Almost every state government intervenes in the market for child care services by providing quality ratings. This paper is about the effect of quality ratings children in Minnesota, with a particular focus on how the benefits from the ratings are distributed. Theory suggests an important reason why the impact of product quality ratings on consumers will be heterogeneous. Consumers benefit from quality information only to the extent that the information has a marginal impact on the choices made. The effect of quality ratings thus depends on what choices are available. Using geocoded panel data on Minnesota child care centers, paired with block group level demographics from the American Community Survey, I empirically investigate the effect of Minnesota’s Parent Aware provider quality ratings on the number of voucher-receiving children who use high quality providers. I estimate the treatment effect of the ratings separately from endogenous selection of the ratings by using a difference-in-differences style approach that relies on providers who switch ratings status during the data period. In order to minimize the effect of arbitrarily chosen market boundaries I treat all of Minnesota as a single market and include distance in the demand model, so that the extent of competition between particular providers depends in a realistic way on the geographic distribution of households and providers, replacing assumptions about market boundaries with assumptions about the structure of travel costs. I find that consumers respond to the ratings and are significantly more likely to choose a provider that receives the highest possible rating of Four Stars compared to an unrated provider. Estimates of welfare at the block group level suggest that density is the most important factor driving variation in the regional benefits of Parent Aware. Importantly, most low-income block groups are in dense areas with enough variation in locally available providers that the benefits of the ratings are high.
How Far Will They Go? The Role of Distance in Child Care Decisions of Low-Income Families
(with Elizabeth Davis and Aaron Sojourner — Draft Available Soon!)
The existing literature on child care examines many factors that play a role in the decisions families make with regard to non-parental care for their children, including whether to use non-parental care, what type and how much. The type of care used has been associated with a number of family and child characteristics, including child age, mother's education, family income, race and ethnicity, and family structure as well as parents’ reported preferences. Yet few studies of child care selection decisions are able to take into account the availability and characteristics of the providers nearby the family. In particular, the role of distance in child-care decision-making is under-studied. While descriptive information suggests parents use child care providers close to home, no studies directly measure the importance of distance in choosing a child care provider.
This study uses highly detailed data on low-income children in Minnesota who receive subsidies combined with data on licensed child care providers to analyze the role of distance and local provider characteristics in families’ child care decisions. We apply standard methods of analyzing consumer demand for differentiated products to model the variation in the local child care market—what is available geographically nearby to families—and estimate multinomial logistic regression models to examine the role of distance and quality ratings in families’ decisions. We find that parents are very sensitive to distance in selection of child care providers and the effects of distance and different quality ratings vary across rural and urban areas. Policies to support use of highly rated care by families receiving subsidies need to be cognizant of the burden of distance on parents and the importance of local supply.
The Decline of Family Child Care: Analysis of Competing Narratives
(with Elizabeth Davis) Draft to be Available in March 2019