This article identifies the extent to which fiscal and regulatory action by state governments shapes the formation of sectors-in this case, including the local availability, organizational formalization, and quality of teachers in child care centers nationwide. These state-level effects are compared to the local effects of family demand and associated demographics of households. Although demand factors (e.g., maternal employment, income levels, and ethnic composition of communities) explain a greater share of the variance in the availability and formalization of child care centers, state governments have been effective in spurring organizational growth within low-income communities, advancing formalization and quality in particular. Communities with more civic organizations and churches per capita display a stronger capacity to expand and formalize child care centers. The formation of this sector appears to stem from pluralistic politics, resulting in variable state spending and regulatory actions, not simply from a deterministic advance of rationalized institutions. P olicy makers and scholars have long debated the state's efficacy in formalizing and expanding local organizationsfrom schools and health clinics to child care centers. The historical literature on school expansion, for instance, has offered competing accounts that have emphasized the force of family demand in a fledgling sector, energized at the individual level by the formation of human capital or status attainment, versus the state's role in surrounding village or church schools and then building "government schools" (Fuller and Rubinson 1992;Hicks, 1999;Walters 2000). But when the state enters a young sector, previously shaped by local demand and private organizations, how effectively can the government equalize the availability of organizations, formalize their structure, and improve their quality? Our analysis was motivated by this starting at Monash University on June 5, 2016 soe.sagepub.com Downloaded from