Price, Quality, and Income in Child Care Choice

Recent legislation may substantially expand federal assistance in paying for child care. This paper examines the potential effects of three aspects of federal assistance-reducing child care price (through vouchers or grants to providers), improving its quality (through incentives or regulation), and increasing family income (through tax credits)-on the child care choices employed mothers make. The data come from the 1985 wave of the National Longitudinal Survey of Youth, Ohio State University. Both multinomial and universal logit models are used. The results suggest that price is a critical variable in child care choice. The higher the price, the lower the probability a mode of care will be chosen. Parents do not consistently select high quality care, although overall quality improvements may increase the use of family day care. Mothers who earn more per hour and families who have higher incomes (other than the mother's earnings) are more likely to select center care over other modes. Consequently, subsidizing child care expenditures directly through vouchers and reduced fees or increasing other family income through tax credits consistently increases the use of center-based programs, all else equal.

Correction: Price and Quality in Child Care Choice: A Revision

In Hofferth and Wissoker (1992) we estimated the effects of price and quality on mode of child care chosen. We found large negative effects of price and quality on choice. This paper presents a revised version of our original model. The new results suggest negative price effects which are smaller than those in the original paper. The estimated effects of child/ staff ratios also become less negative and one becomes positive.

CHOICE CHARACTERISTICS AND PARENTS' CHILD-CARE DECISIONS

Choice models are a key tool of empirically oriented rational choice researchers. However, most researchers do not have the information they need to adequately test their hypotheses and rely solely on individual characteristics of the choosers. The lack of information on the options and constraints parents face may lead researchers to conclude that choices are not rational rather than to question whether they have the appropriate data. This issue is particularly important for researchers interested in modeling child-care choice, since the characteristics of care are more amenable to policy intervention than the characteristics of persons. This paper estimates models of choice of child-care arrangement that include measures of price, quality and availability obtained directly from parents in the National Child Care Survey of 1990. This paper compares alternative estimates of the associations of these characteristics with mode choice. Adding care characteristics to models with individual characteristics improves the explanation of parental child-care choices. Using parent reports of the characteristics of arrangements they used and those they did not use produces results more consistent with expectations than estimates based on predicted values. The results also suggest that having parent reports on the characteristics of alternatives not used improves the precision of estimates of the associations between prices and child-care mode choices. Correcting for selectivity does not appear to be a reasonable substitute when such information is lacking