State regulations and child care choice

While government regulations are designed to safeguard the health and well-being of children, they may also alter the cost and availability of child care, thus affecting parental use of such services. This paper investigates the total effects of regulation on parental choice of child care and the indirect effects of regulation through the price, quality, and availability of care. In our analysis of data from the National Child Care Survey 1990 we find strong evidence that state regulations requiring center-based providers to be trained are associated with a lower probability that parents choose a center, while state inspections are associated with more parental choice of center and home care. We end by discussing the policy implications of our findings.