Skip to main content
Article thumbnail
Location of Repository

Price and quality in the UK childcare market

By Alan Duncan, Gillian Paull and Jayne Taylor


Childcare subsidies are typically advocated as a means to making paid employment profitable for mothers, but also have important ramifications for the use and quality of paid childcare. Even if one is concerned primarily with the quantity aspect, the quality dimension cannot be ignored. This paper provides an exposition of the potential biases in estimates of price elasticities with respect to quantity that do not allow for quality variation or for the possibility of non-linear pricing structures. Using an approach developed in the demand estimation literature, a price measure addressing these issues is derived and the importance of using this measure is tested using British data. Price is found to have a negative impact on the use of formal paid care, the hours purchased and the quality chosen. However, failure to control for quality effects and non-linearities in the price measure is shown to generate significant overestimates of the price elasticities.

OAI identifier:

Suggested articles


  1. (1999). Child Care and Mothers’ Employment Decisions’,
  2. (1988). Child-Care Costs and Family Labor Supply’, Review of Economics and
  3. (1999). Employment and Child-Care Choices in Canada and the United States’, mimeo, MDRC &
  4. Patterns of Childcare Availability and Use and Mothers’ Employment in 1990s Britain’, mimeo, Institute for Fiscal Studies,
  5. (1992). Price, Quality and Income in Child Care Choice’,
  6. (1997). Tax Credits, Labor Supply and Child Care’, Review of Economics and

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.