Economic Effects of Quality Regulations in the Daycare Industry

Chipty, Tasneem; Witte, Ann Dryden

doi:10.3386/w4953

Cited by 31 publications

(38 citation statements)

References 2 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…6 4 We exclude the possibility that households residing in one district enroll their children in the other. This assumption is justi ed by empirical evidence suggesting that few parents will travel long distances to send their children to child care; see Chipty (1995) and Hofferth et al (1991) for the United States and Paes de Barros et al (2009) for Rio de Janeiro, Brazil.…”

Section: Household Preferences and Demandmentioning

confidence: 99%

Entry and Quality Choices in Child Care Markets

Bastos

Cristia

2010

SSRN Journal

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractMany 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 ndings 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.JEL Classi cations: D12, I21, I28, L21, L26, L51, O15 Keywords: Child care markets, Entry, Product quality, Minimum quality standards Acknowledgments We would like to thank, without implicating, Eric Verhoogen for very helpful comments on an earlier draft. We are also grateful to Joseph Hotz for graciously sharing with us the data on U.S. regulations and Lidia Ferraz from INEP for help with the Brazilian microdata. The views expressed in this paper are exclusively those of the authors and not those of the Inter-American Development Bank.

show abstract

Section: Household Preferences and Demandmentioning

confidence: 99%

Entry and Quality Choices in Child Care Markets

Bastos

Cristia

2010

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…Childcare markets are very localized markets geographically. Few parents will travel more than fifteen miles to send their children to daycare (Chipty, 1995;Hofferth et al, 1991). Based on the 1990 population Census, a typical zip code covers a radius of 3 to 4 miles, roughly consistent with the area that a childcare center could cover.…”

Section: Auxiliary Datamentioning

confidence: 99%

“…7 The number of center-based programs (as contrasted to home-based programs) rose 26% from 40,631 in 1987to 51,297 in 1992and then rose 21% to 62,054 in 1997(O'Neill & O'Connell, 2001. 8 Primarily small businesses, childcare centers compete in localized markets, as parents overwhelmingly prefer to have their children cared for in their own residential neighborhood (Chipty, 1995;Hofferth et al, 1991). This study focuses on childcare centers because NAEYC accreditation only applies to center-based programs.…”

Section: A Sketch Of the Childcare Marketmentioning

confidence: 99%

Is quality accreditation effective? Evidence from the childcare market

Xiao

2010

International Journal of Industrial Organization

View full text Add to dashboard Cite

The ineffectiveness of a quality accreditation mechanism can be attributed to the inability of the accreditation status to provide consumers with information they do not already possess. I present a structural model of demand allowing consumers to infer quality from both accreditation status and firm reputation. I then estimate this model to assess the effectiveness and the impact of the national accreditation system for childcare centers on consumer welfare. My results suggest that disregarding the endogeneity of firms' accreditation choices significantly underestimates the effectiveness of the accreditation system. However, on average consumers do not gain much information beyond what they have inferred from a firm's reputation. The estimates of structural parameters are then used to quantify the value of this information to consumers.JEL: L15 (Information and Product Quality); L8 (Industry Studies: Services)

show abstract

“…(Mocan 1995, 26) 29 The important role of licensing and regulations such as number of mandated inspections had previously been observed by Chipty (1995) who, drawing on data from the 1990 National Child Care Survey found them to be binding. market segmentation.…”

mentioning

confidence: 99%

Trust, repute and the role of non-profit enterprise

Ortmann

Schlesinger

1997

Voluntas

View full text Add to dashboard Cite

In this chapter we examine the trust hypothesis: the proposition that information asymmetries between providers and consumers of services can explain the existence of nonprofit enterprise in certain markets. We argue that this hypothesis, in order to be viable, has to meet three challenges: (1) the de jure inability of nonprofits to distribute profits to shareholders and/or management must affect incentives within the nonprofit firm in ways that are compatible with trustworthiness (Aincentive compatibility challenge@), (2) nonprofit behavior must not be adulterated by individuals taking advantage of the perceived trustworthiness (Aadulteration challenge@), and (3) nonprofit status must be treated as a reliable predictor of organizational behavior by consumers, when the reputation of individual firms is not seen as reliable (Areputational ubiquity challenge@). We propose that the trust hypothesis stands on shaky ground. It can be sustained only under particular conditions that have been neither carefully described in theory nor subject to empirical assessment. The available evidence, patchy and inadequate as it is, seems to suggest that there are ownership-related differences in the organizational behavior of non-profits and for-profits. However, there is little evidence that these differences can be connected to trust per se or provide a rationale for the existence of nonprofit ownership. * Center of Economic Research and Graduate Education at Charles University and EconomicsInstitute of the Academy of Sciences of the Czech Republic. E-mail: andreas.ortmann@cerge-ei.cz or aortmann@yahoo.com ** School of Medicine, Yale University. E-mail: mjs4@email.med.yale.edu Note: A shorter version of this paper has been published under the same title in Voluntas, 8:2, 1997, 97 -119. The current version has been updated and significantly revised; it is scheduled to appear in a volume edited by Helmut K. Anheier and Avner Ben-Ner tentatively titled The Study of Nonprofit Enterprise: Theories and Approaches, Kluwer/Plenum, 2002. 2 A. IntroductionIn this chapter we examine what we label the "trust hypothesis": the proposition that information asymmetries in the markets for certain goods and services can explain the existence of nonprofit enterprise in those markets (Hansmann 1980(Hansmann , 1994(Hansmann , 1996; but see also 2001). Assuming that profit maximizing producers might not have an incentive to deliver the quality of goods and services they promised consumers and/or donors, Hansmann was one the first to claim that nonprofits solve the temptation to exploit information asymmetries by accepting the nondistribution constraint 1 -the de jure inability of nonprofits to distribute profits to shareholders and/or management. 2 The nondistribution constraint, Hansmann argued, would effectively take care of producers' incentive to engage in opportunistic behavior. 3 1 The claim was the elaboration of an observation made by Kenneth Arrow (1963) in his assessment of the welfare economics of medical care.2 This defini...

show abstract

Economic Effects of Quality Regulations in the Daycare Industry

Cited by 31 publications

References 2 publications

Entry and Quality Choices in Child Care Markets

Entry and Quality Choices in Child Care Markets

Is quality accreditation effective? Evidence from the childcare market

Trust, repute and the role of non-profit enterprise

Contact Info

Product

Resources

About