Entry and Quality Choices in Child Care Markets

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.

Bibliographic Details

Main Author:	Inter-American Development Bank
Other Authors:	Paulo Bastos
Format:	Working Papers biblioteca
Language:	English
Published:	Inter-American Development Bank
Subjects:	Early Childhood Education, Youth and Children, Child Development, D12 - Consumer Economics: Empirical Analysis, I21 - Analysis of Education, I28 - Government Policy, L21 - Business Objectives of the Firm, L26 - Entrepreneurship, L51 - Economics of Regulation, O15 - Human Resources • Human Development • Income Distribution • Migration, IDB-WP-225,
Online Access:	http://dx.doi.org/10.18235/0011186 https://publications.iadb.org/en/entry-and-quality-choices-child-care-markets
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