For this post, I interviewed Professor Joseph Hotz. He is
the Arts and Sciences Professor of Economics at Duke University. He is a labor
economist who specializes in the economics of the family. His research spans
the entire life cycle of the family, including the relationships between
parents and children at various stages of their development.
I interviewed Professor Hotz about his paper, “The Impact of Regulations on the Supply and Quality of Care in Child Care Markets.” In this
paper, Professor Hotz and his coauthor, Professor Mo Xiao, seek to investigate the
effects of policies that are designed to improve the quality of child care in
the U.S.
Child care centers are regulated at the state level. The
regulations are mostly focused on insuring the welfare of children in the
centers. They include: (1) maximum child to staff ratios, which vary by age of
child; (2) maximum group size; and (3) educational requirements of staff. They also
might include other rules like background checks for the staff, and some
requirements for safety like equipment checks. But these authors focus on the
three that I’ve enumerated, which are widely adopted by states. The specificity
of the regulations, and their severity, vary by state.
There are also two types of centers: center-based, and
home-based or family-based. The home-based centers tend to be smaller, and less
stringently regulated. Developmental psychologists generally agree that
center-based care is of higher quality, in terms of educational enrichment, than
home-based care.
The authors have detailed data about both types of child
care centers in all 50 states, over the period from 1987 to 1997. And, it turns
out that there are some interesting unintended
consequences of the regulations. For one, the authors find that states that
have more stringently regulated center-based care have fewer of these centers;
and in particular it is low income neighborhoods that lose these centers, as
compared to high income neighborhoods. Families tend to find care close to home, so it seems that these regulations, designed to ensure that centers are
developmentally enriching, instead limit access to them; and more so for the families
that might need them the most. In fact, as an example, if the average child to
staff ratio (7.5) is imposed in low income child care markets, the number of
centers would fall by 10%, whereas this requirement would lead to an increase
of 8.7% in the number of centers in high income neighborhoods. Further, with
fewer center-based care options, these low income children end up in
family-based centers, in what is generally considered lower quality care.
There is some good news. The regulations seem to be working:
the centers that do remain as a result of these stringent regulations tend to
be of higher quality. However, again, these centers tend to be located in high
income neighborhoods. So, overall, high income families are the ones benefiting
from this care. All in all, it seems that high income families benefit from
these regulations, while low income families might struggle to gain access to
the best quality centers.
I asked Professor Hotz if there would be a better way to
design child care regulations, to avoid these negative unintended consequences.
He told me that he believes that subsidies to low income households should be
the focus. Such subsidies do exist, but the emphasis has often been on the
parents, with the goal of helping a parent, usually a mother, get off of
welfare and into work. The subsidy will get a child into daycare, but with less
attention paid to the quality of the care. He argues that the focus should be
on the child. For example, it should not be a requirement that the mother must
work in order to receive the subsidy. Developmental psychologists have made
some headway on this issue, and it’s made some progress in Congress. But it has
not gotten off the ground yet.
I asked Professor Hotz about some of his other recent work.
In this paper, he and his coauthors are studying families with stepkin. They
are interested in learning about how much time stepparents spend with their
adult stepchildren, and how much time adult children spend with their elderly
stepparents.
Let’s talk! I would love to know what you think about this
example of unintended consequences. Please submit comments and questions.
