TY - JOUR
T1 - The rising cost of child care in the United States
T2 - A reassessment of the evidence
AU - Herbst, Chris
N1 - Publisher Copyright:
© 2018 Elsevier Ltd
PY - 2018/6
Y1 - 2018/6
N2 - Anecdotal evidence suggests that the cost of child care in the U.S. has increased substantially over the past few decades. This paper marshals data from a variety of sources to rigorously assess the issue. It begins by using a large survey dataset to trace the evolution in families’ child care expenditures. I find that the typical family currently spends 14 percent more on child care than it did in 1990. This is less than half the increase documented in previous work. In addition, most families allocate approximately the same share of income to child care as they did several decades ago. The next section of the paper examines the trend in the market price of child care. The evidence suggests that after persistent, albeit modest, growth throughout the 1990s, market prices have been essentially flat for at least a decade. In the paper's final section, I analyze several features of the child care market that may have implications for prices, including the demand for child care, the skill-level of the child care workforce, and state regulations. A few findings are noteworthy. First, I show that child care demand stagnated around the same time that market prices leveled-off. Second, although the skill-level of the child care workforce increased in absolute terms, highly-educated women increasingly find child care employment less attractive than other occupations. Finally, child care regulations have not systematically increased in stringency, and they appear to have small and inconsistent effects on market prices. Together, these results indicate that the production of child care has not become more costly, which may explain the recent stagnation in market prices.
AB - Anecdotal evidence suggests that the cost of child care in the U.S. has increased substantially over the past few decades. This paper marshals data from a variety of sources to rigorously assess the issue. It begins by using a large survey dataset to trace the evolution in families’ child care expenditures. I find that the typical family currently spends 14 percent more on child care than it did in 1990. This is less than half the increase documented in previous work. In addition, most families allocate approximately the same share of income to child care as they did several decades ago. The next section of the paper examines the trend in the market price of child care. The evidence suggests that after persistent, albeit modest, growth throughout the 1990s, market prices have been essentially flat for at least a decade. In the paper's final section, I analyze several features of the child care market that may have implications for prices, including the demand for child care, the skill-level of the child care workforce, and state regulations. A few findings are noteworthy. First, I show that child care demand stagnated around the same time that market prices leveled-off. Second, although the skill-level of the child care workforce increased in absolute terms, highly-educated women increasingly find child care employment less attractive than other occupations. Finally, child care regulations have not systematically increased in stringency, and they appear to have small and inconsistent effects on market prices. Together, these results indicate that the production of child care has not become more costly, which may explain the recent stagnation in market prices.
KW - Child care costs
KW - Child care demand
KW - Child care regulations
KW - Parental employment
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U2 - 10.1016/j.econedurev.2018.03.005
DO - 10.1016/j.econedurev.2018.03.005
M3 - Article
AN - SCOPUS:85044931726
SN - 0272-7757
VL - 64
SP - 13
EP - 30
JO - Economics of Education Review
JF - Economics of Education Review
ER -