Rethinking U.S. Child Care Policy
Demand for high-quality care will increase only when consumers have better information about child care and stronger economic incentives to purchase excellent care.
Child care in the United States is, by many standards, in poor shape. Commonly heard complaints include that today’s system of child care endangers the well-being of children, causes financial hardship and stress for families, makes it next-to-impossible for low-income families to work their way off welfare, causes substantial productivity losses to employers, and prevents many mothers from maintaining productive careers in the labor force.
Because child care is a service that is bought and sold in markets, economics can provide a useful framework for thinking about its problems. As with any commodity, supply, demand, cost, price, and quality are key elements of market analysis. But with child care, quality plays a special role, because this characteristic may affect the development of the children who receive the care. Extensive research during the past 25 years documents a positive association between measures of child care quality and the social, emotional, and cognitive development of children. Although most of this research stops short of proving that the association is causal (there is ample reason to expect that children who would have developed well anyway will probably be placed in higher-quality care environments), a number of well-structured studies do support a causal relationship. These studies also show that the benefits of high-quality care are probably larger for children who are at risk of developmental delays as a result of living in poverty.