TY  - JOUR
AU  - Mukerjee,Swati
AU  - Witte,Ann Dryden
AU  - Hollowell,Sheila
TI  - Provision of Child Care:  Cost Functions for Profit-Making and Not-for-Profit Day Care Centers
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3345
PY  - 1990
Y2  - April 1990
UR  - http://www.nber.org/papers/w3345
L1  - http://www.nber.org/papers/w3345.pdf
N1  - Author contact info:
Swati Mukerjee
Bentley University
175 Forest Street, AAC 183
Waltham, MA 02452
E-Mail: smukerjee@bentley.edu

Ann Dryden Witte
500 SE Mizner Blvd., # A904
Boca Raton, FL 33432
Tel: 561 361 4398
E-Mail: awitte@wellesley.edu
AB  - This paper estimates cost functions for day care centers in Massachusetts. The production technology assumed is the generalized homothetic Cobb-Douglas production function. The cost function dual to this production function is estimated separately for profit-making (P1Os) and not-for-profit (NPOs) organizations. The results are discussed in the context of current NPO literature. NPOs are found to be operating at higher average coats than PMOs for most output levels as predicted by the literature. However, the provision of more staff per child hour, our measure of quality, increases coats by similar amounts in PMOs and NPOs. Further, present forms of subsidies do not help either PMOs or NPOs, and in fact, promote 'shirking' in NPOs. PMOs are not optimizing with reference to the amount of education and experience in their personnel. The results suggest that experienced labor may be working for less than its marginal product in the day care industry.
ER  -