The Demand for Quality Child Care: From a Hedonic Price Approach vs. from a Parent's Perspective

Youngok Lim, Cornell University
Elizabeth Peters, Cornell University

Studies have rated the quality of child care in the U.S., on average, as ‘mediocre’ (Helburn, 1995). However, it is not clear what is responsible for this mediocre quality. Is it due to the lemons market problem or due to the lack of demand for quality on the part of parents? To answer this question, we replicate Hagy (1998) and estimate the demand for quality using a more recent data set we have collected. We find that lowering the implicit price for child-to-teacher ratios would not affect parents’ demand for it. However, we also show that quality, as measured by parents, is the most significant factor in predicting parental desire to change child care arrangements. To reconcile these somewhat contradictory findings, we examine parental quality ratings against several sub-dimensions of quality measures. The empirical results suggest that parents and researchers define quality differently.