Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215300 
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 12904
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We develop and estimate a model of child care markets that endogenizes both demand and supply. On the demand side, families with a child make consumption, labor supply, and child-care decisions within a static, unitary household model. On the supply side, child care providers make entry, price, and quality decisions under monopolistic competition. Child development is a function of the time spent with each parent and at the child care center; these inputs vary in their impact. We estimate the structural parameters of the model using the 2003 Early Childhood Longitudinal Study, which contains information on parental employment and wages, child care choices, child development, and center quality. We use our estimates to evaluate the impact of several policies, including vouchers, cash transfers, quality regulations, and public provision. Among these, a combination of quality regulation and vouchers for working families leads to the greatest gains in average child development and to a large expansion in child care use and female labor supply, all at a relatively low fiscal cost.
Subjects: 
child care markets
child care quality
early childhood development
female labor supply
JEL: 
J13
J22
L1
Document Type: 
Working Paper

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