Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88974
Authors: 
Bastos, Paulo
Cristia, Julian
Year of Publication: 
2010
Series/Report no.: 
IDB Working Paper Series IDB-WP-225
Abstract: 
Many developing countries have adopted the market approach for expanding the supply of child care, but little is known about the economic behavior of independent providers. This paper draws on uniquely rich administrative data on child care centers and their inputs from São Paulo to examine the role of local household income in shaping the entry and quality choices of private suppliers. It documents three main facts: (1) entry rates are considerably higher in high-income districts; (2) the quality of provision as measured by teachers’ schooling, group size and equipment is highly heterogeneous across space and increases systematically with local household income; and (3) a considerable share of centers operates below recommended (but not regulated) quality standards, especially in low-income districts. These findings accord with a model in which heterogeneous providers optimally adjust the quality of care to the willingness to pay for quality of local consumers. Market-driven heterogeneity in the quality of provision across space is a key consideration for understanding the effect of regulations on the supply of child care.
Subjects: 
Child care markets
Entry
Product quality
Minimum quality standards
JEL: 
D12
I21
I28
L21
L26
L51
O15
Document Type: 
Working Paper

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