SUPPLY AND DEMAND FOR CHILD CARE SERVICES

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This project will analyze two recent national surveys to contribute basic information on the operation of the child care market. The focal point of this research will be to measure the behavioral responses of consumers and producers to the economic incentives they face. Analyses of producer behavior will quantify the determinants of the supply of child care services. For center based providers, the analysis will recover estimates of child care technology, and elasticities of supply and factor demand. The theory of production economics will be used to investigate whether behavioral differences exist between non-profit and for-profit centers. Analysis of informal providers will focus on individual entry decisions into family home providership. It will investigate the relative importance of family structure, local economic conditions and the state regulatory environment on entry into the profession. The analysis of consumer behavior will incorporate transaction costs and heterogeneity (observed and unobserved) in preferences and opportunity sets across households, The proposed research will illuminate potential sources and magnitudes of friction in the child care market. The analysis will characterize the consumer search process and will investigate whether this observed behavior is consistent with economic models of search. The surveys employed endogenous sampling techniques. This project will assess the practical difficulties of their use. The project will implement recently proposed simulation estimators for complex discrete choice models. Monte Carlo analysis will characterize their statistical properties. The practical implementation of these estimators will also be assessed.