Essays on child care.

Abstract

Chapter 1 analyzes wage differentials for employees in the child care sector. This essay uses the NCSS (National Child Care Staffing Study) data to take a new look at the popular hypotheses used to explain wage differentials between non-profit and proprietary providers. Neither of three main hypotheses (property rights, asymmetric information, labor donation) can be clearly supported or ruled out. The findings however distinctly underline the importance of focusing explicitly on quality in answering the question why wage differentials exist, thus pointing into the direction of the asymmetric information hypothesis. Chapter 2 addresses the problem of quality choice in the market for child care. I develop a model of quality choice under imperfect information that is capable of addressing the pertinent issues in a market for a differentiated service commodity. The existence of asymmetric information and the difficulties in assessing quality make credence commodities rather than the more commonly used concept of experience goods the choice for describing child care in the model. A basic model addressing the peculiarities of the child care market is developed. The model is then extended to deal explicitly with asymmetric information. A simulation using data from available empirical studies is used to test the implications of the theoretical model and determine the likely equilibrium. Based on the simulation the implications of the findings for policy makers, and the difficulties entailed by the use of the typical regulation instrument in place today, the quality floor, are discussed. A shift of the debate to other instruments of state intervention to assure the provision of quality care in the market for child care is the course of action indicated by the model.